Let's think about the computer industry back in 1985. Segment the market. Sure there were buyers who needed advice and handholding (basically, pre-sales service) and they went to computer dealers like MicroAge who gave it to them. They also were to EggHead and bought their software and they too provided a lot of advice that this segment of the market wanted. That's because they were novices.
Is this surprising? No. At the beginning of a lot of new technologies and products there is always a segment of consumers who are novices and need the service and in fact often want to buy a "turnkey" system. That is, they want someone else to put it together and connect all the wires, etc.
Maybe you don't remember this, but stereos were sold as turnkey systems in the 1950s and early 60s. They were called consoles and people went to stores where they got consoles and advice. Eventually, of course, this industry changed (due, in part, to a standard called RCA plugs, that allowed people to mix and match components from different vendors). Also, many of those stereo novices became experts and didn't need the pre-sales service and weren't willing to pay for it. They wanted a lower price instead (i.e., they traded off low price for service) and they wanted to configure their own systems. Of course, not everybody was willing to make this trade-off, and those that didn't remained in a different segment.
The same thing happened with computers, and around the mid 80's a segment emerged that was also willing to trade off low price for service. In fact, just as in the stereo industry, customers became more expert and wanted to configure their own systems. So now we have a segment that doesn't want or need the handholding provided by existing channels of distribution.
Was there a revolutionary new channel that could be configured to meet this segment's needs? Well, actually, companies had already discovered the 800 number (think catalog marketers like Lands' End and Sears). The Internet is a natural extension of this channel concept.
So what did Michael Dell do? He simply segmented market and used a previously known method for reaching the segment. This is Marketing 101.
Oh, you say that his "build to order model" was visionary. Really? Was he the first to realize that some customers wanted things customized at the feature level and that a business might be configured to deliver this? Well, if you remember it was back in the early 1970's when Burger King had the slogan "Hold the pickles, hold the lettuce, special orders don't upset us, all we ask is that you let us "Have It Your Way?"
Come onâ€¦a visionary? Now this is not to say that Dell hasn't done a terrific job of implementation - he has, and I've profited from owning Dell stock. But let's not confuse this with visions, etc. especially when it comes to the marketing side of things.
Take the first step (it's free).
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