Dell became No.1 without using the most powerful ad medium
2010 saw folks at Dell, the world's No.2 personal computer maker, finally uncork the bubbly. After having set for itself the task of becoming the No.1 PC brand in India back in 2007, the company finally managed to check all the boxes, one by one, over the last four quarters.
An early sign of Dell's intentions came in early 2010 when it became clear that it had beaten the long-reigning PC champ of India, HP, in the laptop market. HP fought back by reclaiming the notebook title in the first quarter. However, Dell finally had its revenge in the June quarter when it emerged as the top PC brand India — notebooks and desktops combined — cutting short a five-year-reign by HP. As if to rub it in, the September quarter numbers also showed HP's final bastion — desktops — had also fallen to Dell.
Three years is all it took to grab the throne, and without using the biggest advertising medium in the country — television. DNA caught up with Amit Midha, chairman of Dell's Greater China and South Asia unit, to find out how the firm looked back on the year. Excerpts from the interview:
Can you explain how and when you came to focus on India?
The shift was part of an overall global strategy of focusing on emerging markets. We believe that the current trend (of PC growth in India) is a major cycle where certain large emerging markets will do reasonably well for the foreseeable future. China led the way, starting their liberalisation 20 years before India. Today, we believe India is around 7-10 years behind China, in terms of catching up to the same earnings level and so forth. In fact, in Q3 (quarter ended September), China has crossed the US to become the top PC market.
By 2030, we estimate India's earnings per head will be around $8,000-10,000 (from less than $1,000 now). At that sort of per capita income, you have to have consumption of IT products at a significantly higher level. India is very open to an American brand, outside technology and the people do value high quality products — even when they are very price sensitive. So, in 2006, we set up a manufacturing plant in India (near Chennai). It was a move similar to our decision to focus on other emerging markets before that. For example, we established manufacturing operations in Malaysia and China around 10-12 years ago.
But you have been more visible only in the last 2 years or so…
Yes. We had a good employee base in India (currently 23,000), we had a manufacturing base. We thought the brand was a gap. So it was a matter of getting the message out... So, around 3.5 years ago, we said we need to launch a brand campaign, we need to commit to the market in a significant way. So, after setting up manufacturing in 2006, in 2007, we started going through channels (retail network) because we realised that our traditional online and call-centre model would not work (in India).
What changed in the last year-and-a-half?
Product was there, pricing was there, quality was there, services network was there, but people did not have an opportunity to go and experience the products... All of a sudden, all the things came together.
You have built up the biggest PC brand in India in the last 3 years, but you haven't used the TV. Is it part of your strategy to keep costs down?
It's our DNA. We are pro-customer (in driving down costs) and that connects well with the mindset in India...
We didn't use a film star to say, "Buy Dell." That doesn't fit well with our DNA. The believability of a customer who has used your product is significantly higher than that of a celebrity taking money to endorse your product. It's going to accelerate more with Twitter and Facebook. We were able to get to number one spot without having to spend on the most expensive marketing communication platform.
Do you plan to tweak your strategy, since you are No.1 now and there will be increased pressure on you to keep your crown?
We believe that it is better to create a pull from the customer than to create a push through the channels (retail network). If you push through the sales personnel, your margins will suffer; suddenly you realise that you don't have a fresh inventory in the market...Besides, there is a limit to how much you can push through sales people. Research suggests that 26 of Indian consumers search online before they even set foot in a retail store, because a computer, as a percentage of your family income, is very high.
We have seen consumers do research for several days, and even weeks before buying a computer... It is more important to create value rather than try to get film stars to endorse your product. That said, we have started dabbling in banner ads (online). Potentially, we may do TV ads as well, but we haven't decided yet.
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