Dell, Inc. B2B Marketing - Derived Demand Essay

Dell, Inc. B2B Marketing - Derived Demand - Essay Example The final goal is to scrutinise Dell’s marketing channels and design channel strategy for a new market segment. The major findings reflect that: †¢ An increase in the derived demand directly leads to a rise in Dell’s production and this concept assists the company to reduce its operating costs. †¢ The company adopts geographical market segmentation approach †¢ Dell uses social media as its major marketing channel to interact with its corporate customers. Introduction Dell, Inc. is a US-based multinational computer technology corporation which was found by Michael Dell in 1984. The company deals in sales of computers and supports computer related products and services including computer peripherals, computer software, and IT consulting services. Currently, Dell is one of the world’s largest technological corporations and provides employment to over 103,300 people worldwide. Business acquisition is the major expansion strategy of the company and this approach has assisted the company to significantly improve its customer base over the last decade. Currently, the company is the world’s third largest PC maker and it is ranked 41 in the Fortune 500 list. The company also sells other manufacturers’ electronic products including HDTVs, MP3 players, cameras, and printers. Market analysts opine that innovations in e-commerce and supply chain management can be considered to be core strengths of the company. As we discussed in the previ ous assignment, Dell is a business to business organisation that provides B2B transactions called PremierConnect to its customers. This facility assists the organisation to deliver improved shopping experience to customers. Hardware infrastructure, outsourcing services and ERP are the major components that Dell needs to be supplied to make the company’s PremierConnect services effective. We have already discussed how Dell’s B2B strategies assisted the organisation to add value to its value creation process and sustainability. The concept of derived demand is of vital importance in B2B marketing. This paper will specifically evaluate how Dell estimates derived demand, evaluates business segmentation opportunities, and develops a new channel strategy aligned to one new business segment. Drivers of derived demand Derived demand and Dell’s production In the words of Hutt and Speh, the term derived demand indicates the relationship between â€Å"demand for an indust rial product and the demand for consumer products†. The authors add that â€Å"the demand for an industrial product is derived from the ultimate demand for consumer products† (Hutt and Speh, 2009, p.13). In simple words, an increase in the supply of a specific good or service in turn leads to a rise in the derived demand for production components or raw materials required for developing that product or service. Therefore, this situation would result in an increase in the price of associated components of production. Dell manufactures and distributes an array of computer related products to various retailers. Data indicates that Dell is a potential supplier to many fortune 100 companies (Business Affiliates). Hence, an increase in the supply of any of those companies would indirectly add value to the derived demand for Dell’s production components. Under such circumstances, Dell is forced to supply more production components to its retailers so as to enable them t o meet increasing customer needs. Hence, this situation causes to increase Dell’s total production volume. It must be noted that the level of derived demand generated is heavily dependent on the retailer’