The Perceptor Model
The position of a company in the industry, relative to its competitors, can be determined by the use of various market analysis models. The preceptor model, which involves a structured trial and repeat process used to estimate market share for a new product, can be utilized to assess the position of Dell’s Executive PC in the product space. Essentially, consumer preference is influenced by two primary attributes, flexibility and performance, which serve as the basis of competitive positioning. Up to 50.0% of consumers prefer high-performance brands, a clear sign that the Executive PC is competitively positioned in the computer market (Benedetto, n.d.). Based on the following calculations, Dell’s projected share of the market is 50%.
- Brand position for Dell = 1
- Size of the segment relative to the market = 0.5
- Projected market share 1 X 0.5 =0.5
- Expressed as a percentage = 50.0%
Recommended Marketing Mix
The advertising marketing mix is recommended because it guarantees better returns while enabling the company to derive maximum benefits from the initially proposed budget. Using the assessor model for budgeting gives a range of 5.0% to 90.0% market share of the potential customer base (Benedetto, n.d.). The distribution approach would yield a wider 0.0% to 90.0% range for the same amount of money, rendering it a less preferred model. The market share estimates are expansive as they span from 0 to 90% in the case of the assessor model, as opposed to the preceptor model, which gives 50.0%.
A Five-Year Projection Based on the Assessor and Perceptor Models
The following worksheet presents a five-year projection of Dell’s Executive PC based on market shares derived from the preceptor and assessor models. The market share is presumed to be constant throughout the five years. Notably, the figures, as presented in thousands of units or dollars, indicate that the company will record increasing sales consistently until the end of the fifth year. However, the sales may vary significantly depending on the model used to project the sales.
Table 1: Five-Year Projection
Effects of Compaq’s Repositioning on Dell
Compaq may adopt a strategy giving it a competitive advantage in the market, which will significantly affect Dell’s performance. For instance, Compaq may gain a larger share of the market by introducing a high-performance product. If Dell loses 20% of the market share to Compaq in the second year, the effect will be felt throughout the subsequent years, as shown in table 2. Essentially, Dell will record a reduction in sales due to the fall of the exponent value by 0.2, as shown as well in table 2. The figures, also expressed in thousands of units or dollars, indicate that the company will have reduced sales if Dell does not adopt a countermeasure strategy. However, the company could protect its position by intensifying product marketing campaigns. Besides, it might be necessary to increase the budget allocation for consumer and trade advertising to cope with the market competition.
Table 2: Five-Year Projection
Opinion in Whether to Launch the Executive PC or Not
Dell should launch the Executive PC because a ready market for high-performance computers already exists. In addition, the company has positioned itself as a competitive player in the industry. Hence, the management must adopt a strategic approach for the certainty of creating user awareness of the superior aspects of the Executive PC. Particularly, the marketing team must emphasize the new design’s unique capabilities, as it is apparent that customers are interested in powerful machines.
Reference
Benedetto, C. A. (n.d.). Dell computers [Case study].