The company selected for observation is Dell Australia. Dell Australia has been in the country since the early 1990’s and has been servicing the governments, businesses and the household consumers since then. Dell Australia provides the technical support, customer support, marketing, sales and other supported functions from the headquarters which is located in Sydney. (Dell Aaustralia, n. d. ) By the use of metrics the organizations can improve their businesses. Metrics are the measurement units that are used to analyze the performance of various things like the key performance indicators or the impact factors.
Metrics can be used to identify the good and bad impacts on the operations of the organization. (How to use metrics to improve your business, n. d. ) The paper will analyze various customers and marketing metrics which would selected with regard to the industry which is the personal computer industry where Dell Australia operates. There are numerous metrics to measure the attractiveness of a company individually and even with respect to the competition but for the paper the metrics that would be used will be the ones most appropriate to the industry and the organization.
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The metrics for the paper will be market share attractiveness, market penetration, marketing ROI, customer satisfaction and customer life time value. The following metrics are both internal and external evaluation for the company. Market share, relative market share and market penetration would analyze the external factors of the organization while the customer lifetime value and customer satisfaction is an internal evaluation of the organization.
I think that the most important tool that the company should use is market share. This is the quantitative variable in which the results would be quantified. Marketers can use it to analyze the effectiveness of their campaigns. This metric is even more important than the various financial measurements like the ROI or ROS. The reason for calling it as one of the most important metric is the fact that it is a relative measure of the organizations share against the other external benchmarks.
Since Dell has to face immensely competition in Australia by Apple, IBM and other huge multinationals so the best way in such a situation to measure the effectiveness is to do so by comparing oneself with the competition. The market share is a way by which organizations identify their part of the chunk with respect to the competitions. Using internal metrics alone is not sufficient and organizations need to measure its competitiveness in relative terms in order to get the bigger and the better picture.
The internal metrics like the customer satisfaction or brand valuation would only tell about the organizations product in isolation while the market share evaluates the company’s effort with respect to the competition. The portable personal computer industry is in its mature phase where there are numerous giants all ready to eat up the revenues of the other firm. In such a situation it cannot be enough to rely on the internal metrics but a market share metric would be the most important tool to analyze the share of the company with respect to the competition.
It would also justify the marketing expenses that the organization would be incurring in order to compete with the competition in order to attain more chunk of the market.
Relative Market Share:
This is another tool by which the organization can analyze its own market share with respect to the competitors. The difference between the market share and the relative market share is that in the unit market share the size is relative to the whole market while in relative market share the analysis is based on the market share of the competitor leading in the category.
The purpose of this metrics is to assess the comparative market strength, that is, the organizations strength in with respect to the largest competitor in the industry. This analysis provides a much better position of the company with respect to the largest competitor. This is also a quantitative measure where the results could be quantified. (Things to consider before implementing BSC, 2010) This would be very important in such an industry where there is a cut throat competition between the few giants in the market.
Currently in the Australian personal computer industry Apple is the market leader, thus by using a relative market share Dell would be in a better position to analyze itself with the competition. In such mature industries the companies have to be very prudent in terms of calculating their market share. The company by using relative market share may be able to compare itself with the rest in the industry and then work accordingly. It would also tell the company its current position with respect to the market leader. (Young & Aitken, 2007)
Other marketing tool which can be used to measure the relative market share of the organization with respect to the competition is the growth-share matrix which is also known as the BCG matrix. This could be used to gauge the market share of the organization with respect to the competition. It can also identify if a particular product is in its which phase. It serves as a good way of comparing the company’s product with that of the competition. The sizes in the matrix identify the share of the company with respect to competitors.
This is also one of the market metrics which is used to measure the acceptance of the company’s product by a certain population which is the target market of the product. This metrics is used when introducing new products in the market. Since the purpose of this metrics is to see the acceptance of a new product so it would be of a lot of importance for the organizations in the personal computer industry where there are upgrades and newer versions very often.
Such industries have new products or newer versions coming up very often so such companies require a tool to test the acceptability of the new product within their target market. The company’s would want to use this metrics before launching the product because they would want to see how far the new product will be acceptable and would want to curb any loses that the company might face if the product fails after its introduction. (Stuart, n. d. ) The market penetration metrics is a quantifiable tool where the results can be quantified and presented in numeric ways.
This tool is very relevant to the selected company because Dell has been coming up with new and improved versions of the personal computer, thus in such a situation market penetration would be used to analyze the acceptance of the new product within the target market. Other marketing tool that can be used to see the acceptance of the new product is test marketing in which the company would be testing its product within a particular segment of the society which is similar to the target market of the product. This is done in the pre launch phase in order to see if the product will be accepted by the market.
Customer satisfaction is one of the most important factors in driving the business results. This is a qualitative tool because the level of satisfaction cannot be quantified. It has different ways of measuring it as the level of satisfaction is denoted by different phrases which would be used in order to get the customer’s feedback. This is a part of the customer metrics which is important in order to gauge the response of the customer. The customer satisfaction metrics is important for Dell because it has been criticized very much for its dissatisfied customers.
In such a situation customer satisfaction has become very important for the company. By the customer satisfaction metrics the company would get the customers feedback regarding the product and a further in depth analysis can also identify the areas where the organization may be lagging behind and which may be the root cause of the customer dissatisfaction. The organization would be in a better position to analyze if its efforts are enough to have a satisfied customer base. This would be a very good means of getting the customer’s response as it would use a direct feedback from the customer.
The metrics tend to measure the level of satisfaction of the customers on the basis of various pre set criteria of the company. Customer satisfaction is obtained through various customer surveys which an organization does by taking in account the quality and various specific dimensions of the product that are essential to the consumers. The customer satisfaction metrics is an internal measure which does not only tells the company about the satisfied customer base of the organization but it is also a good indicator of customer loyalty.
Customer Lifetime Value:
The last metrics that should be ued by Dell is customer lifetime value. This is important for any organization because it gives a long term view to the organization with respect to its profit. This is a purely quantitative tool where the results obtained are in numeric forms. The customer lifetime value metrics provides lifetime revenue that the company will generate from its each customer. Since forecasting alone is not enough for an organization so in order to get a better picture the organization should use the customer lifetime value metrics.
This would help Dell in analyzing the most profitable customers for the company which it should focus on. Dell would then be in a better position to make strategies for future as it would know which of its customers would be more profitable for the company in future. This method would further help the company in using other metrics like customer retention and customer loyalty. Since it would identify the amount an individual customer would spend so the company would be in a better position to form the retention and loyalty strategies and also the customer retention and customer loyalty metrics in an organization.
(Lenskold, 2004) There could be various other tools that could be used to measure the future profitability of the company. The sales forecasting is another method by which the organization could predict its future sales but the problem with this method is that it does not identifies the sales from a particular customer but just an overall sales figure of the company. Ways to measure Metrics The metrics that have been mentioned above can be measured in the following ways: Market Share The market share is the percentage of the organization’s market which is expressed either in units or in terms of the revenues.
The formula to calculate the market share is: Unit market share (%) = unit sales (#) Total market unit sales Revenue market share (%) = Sales revenue ($) Total market revenue ($) The company has to convert the sales target into market shares because this would tell the company if it can get the predicted percentages by growing along with the market or by grabbing the competitor’s share. The company in order to calculate this would require the mentioned data of the company. The company can evaluate itself by comparing the figures that it has obtained by the previous year or over a particular period of time.
The company could also compare itself by the other companies in the industry. This would provide a competitive analysis. Relative market share: The relative market share is used to analyze the company’s share against the share of the market leader. The formula for calculating the relative market share is: Relative market share (%) = company’s market share (#) ($) Largest competitor’s market share (#) ($) The relative market share gives a benchmark to a company’s share against that of the largest competitor in the industry.
This would require the company’s share along with the share of the largest competitor which is taken as the benchmark while calculating the relative market share. The company could do this each year just to see how much its market share has grown or shrunk with respect to the competition. Market Penetration: Market penetration is used to see the acceptability of the product. It is calculated by the following formula: Market penetration (%) = customers who have purchased the product in the category (#) Total population (#)
Market Penetration since is a quantitative tool so the results obtained would be in numeric form which can be compared over time. This could be done biannually in order to see if the number of people using the product has increased or not. This could also be done after a company has initiated any campaign to increase the penetration of the product. The company could test its efforts by calculating the penetration. (Paul, n. d. ) Customer Satisfaction Customer satisfaction is measured by conducting surveys. The survey would be done in order to find out the level of satisfaction of the customers. The questions in the survey could include the opinions from the respondents and scales where the respondent can rate their levels of satisfaction.
The tool that can be used in order to gather the data could be a questionnaire with a five point scale which can either include numbers from 1 to 5 to denote the levels of satisfaction or the scale which would include the following 5 levels:
- Very satisfied
- Very dissatisfied. The survey are a quick means of gathering the data as they can be returned very quickly and are also a relatively cheap method of data collection.
Thus it could be done many a times and easily. The survey could be done via a telephone or even it could be emailed to the respondent or it could also be done face to face with the respondent The company could test the level of customer satisfaction very often to see if they are on the correct lines. The number of respondents could vary to any number as there is no specific number. The company should look for getting more and more respondents as the larger the sample the better the survey. (Davis, 2009)
The survey for Dell could include questions like the following mentioned below:
- Did the company deliver what it promised?
- Are you satisfied by the quality of the product?
- How satisfied are you with the customer support service of the company?
- Are the issues resolved in timely manner?
- Is the company able to meet the deadlines that it gives?
- How satisfied are you with the purchase you did from Dell?
- What to do think about the company overall?
- Rate the following factors of the product: Reliability; Security; Usability
- How satisfied are you with the service of the company?
The company should aim to gather information about the satisfaction of the consumer in all the important factors of the product. The survey should also get the opinions and comments of the consumer on the important factors of the product and the factors that are very critical to the company. The factors could vary from product to product as in one computer graphics may be of more importance while in the other the hard drive could be the critical factor on which the company might want to get the satisfaction level of the consumer. (Customer Satisfaction Survey, n. d. )
Customer Lifetime Value The customer lifetime value is the measure of predicted revenue from each customer. It is calculated by the following formula: Present Value = Future Value / (1+i) n (1+i) = Interests N = No of Years The short term tools may not be able to gauge the company’s position in the right manner thus long term tools can be used to predict for the future. This could be done for the most profitable customers. The company may do it whenever they want to invest in to their customer base. This would identify the company which customer is worth spending for.
The company may justify its customer relationship management spending by the use of this tool. (Tyagi & Gupta, 2008) Recommendations: The company can improve the metrics that has been suggested to use by Dell by incorporating the following activities: Since market penetration is done in order to see the acceptability of the product so it would be better to do it in the introductory phase of the product so that the company does not waste its resources in launching the product and then facing the problems of not being accepted properly.
The market penetration could also be accompanied by a survey which would identify the reason of either being accepted or not being accepted. This would serve as a feedback for the company which would be very beneficial for it even in the long run when introducing new products. The company can improve the customer satisfaction metrics by making sure that the survey includes very pertaining questions. For this the company should work very prudently and identify the most important factors for each product and the company overall which may be used to test the level of customer satisfaction.
If the factors selected would not be right the company may not be able to test it properly and would then waste its resources that it will spend on finding customer satisfaction. The company should identify the factors by the consensus of the learned people who may have experience with the company and the product as well. In order to correctly identify the value of the customer the company should have a proper managed database of each and every customer in order to implement the customer lifetime value tool properly.
The better way of doing so would be to divide the customers in various related groups like business customers and domestic customers and so on. This would make it easy for the company to calculate the customer lifetime value for the group rather than doing it for each customer. Dell being a giant multinational would have numerous clients and thus it would be difficult to keep a close record of each and every customer. Thus in such a situation a customer group would be an easier way to go. The company would know which group is more profitable and then may formulate strategies accordingly.
The company should use the following metrics on regular basis because then it would be able to compare the current results from the previous results. This would make metrics more effective for the company as there would be a first hand way of comparing the results. This would also make the company better with such metrics as by doing it over and over again Dell would be able to remove any sort of errors from the procedure and come up with better and improved ways of using the metrics. Conclusion The paper has analyzed Dell Australia with the various metrics that it can use in order to test its market and the customers.
The metrics that would be most suitable for the company are market share, relative market share, market penetration, customer satisfaction and customer lifetime value. All of these metrics are very important for the company as they tend to provide the short term and long term measurements of the company. All these five metrics are ample to find the external and the internal view of the company. Dell would be able to analyze itself in a well organized manner as these five metrics would provide an insight on the customers and the market where the company is operating.
The relative market share, market penetration and the market share metrics is the external approach while the customer satisfaction and the customer lifetime value is the internal approach. The company by following the above mentioned metrics and the recommendations may be able to work efficiently in the industry.
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