Dell was setting a very rapid pace of new product introductions during the period analyzed by the author and afterwards as well. The focus on just the direct channel and thoughts of disintermediating the indirect channels through their highly successful direct build-to-order model blinded Dell from the much larger and more diverse profit pool all channels could provide. Ignoring these market dynamics and believing the direct model was by far going to win the battle of channel models in the PC industry, Dell experienced exceptional declines immediately following this rapid run-up of growth. In the end, Dell chose to use the profit pool concept to gain an even greater insights into their customer base and was able to generate profits 3 times higher than industry average (Gadiesh, Gilbert, 1998). Dell recovered form a potentially disastrous situation by using the profit pool concept effectively.
There is also the example of how...
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