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Clicking with Hispanics

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At a time when the overall PC market has reached the saturation point, Dell has stepped up its efforts to attract Hispanic consumers.

Dell isn't the first PC manufacturer to aggressively target Hispanics. Some of its competitors, including Gateway and Hewlett-Packard, have for years courted Hispanic customers with Spanish-language broadcast advertisements, services, Web sites, or celebrities.

In its initial big push into the Hispanic market, Dell is taking a broad approach and targeting low-income, middle-class, and affluent consumers, observes Felipe Korzenny, CEO of Cheskin, a Redwood Shores, California, research firm that specializes in the Hispanic market.

Dell does not reveal the demographics of its target markets, track the ethnicity of its customers, or disclose its spending on advertising. However, CEO Michael Dell says, "Our overall consumer-advertising spend is the largest in the industry."

Part of that money is being used to entice Hispanic consumers who speak only Spanish with advertisements on Univision and a new Spanish-language Web site, /espanol. The Round Rock, Texas-based company aims to attract English-speaking Hispanics with English-language advertisements in Hispanic-oriented national magazines and local markets such as Austin, Texas, and San Antonio. Dell also has increased marketing to Hispanic professionals at various annual conferences.

Mr. Dell says the company's new strategy is part of a broader effort to reach more consumers overall with advertising and new product lines. "If you go back three or four years ago, we were not participating as broadly in the consumer market as we are now," says Mr. Dell. "We are now No. 1 in the U.S. consumer market, so there's a lot more going on in terms of [marketing to] Hispanics as well."

Late last year, Dell began airing its first nationwide Spanish-language television advertisement for U.S. Hispanics. The commercial first appeared on a Houston station and aired on Univision for about eight weeks. Dell expects to evaluate the commercial's effectiveness to determine how it will be used in the future. With the Univision ad, Dell is taking dead aim at mostly low- to middle-income Spanish-speaking consumers. Univision's owned and operated stations routinely rank No. 1 in their respective markets among adults 25 to 54 years old.

Dell's Spanish-language Web site, launched late in 2003, targets consumers that prefer to use Spanish only or a combination of Spanish and English when surfing the Web. About half of Hispanic Internet users prefer Spanish-language content, according to comScore Media Metrix, a Reston, Virginia-based Web research and measurement firm.

Dell increased its participation in annual conferences of Hispanic organizations partly to market its products directly to influential, upscale participants including La Raza, the League of United Latin American Citizens, the National Society of Hispanic MBAs, and the Society of Hispanic Professional Engineers. At each conference, Dell showcases cybercafés where participants can use the company's computers to surf the Web and check e-mail.

Dell dominates the overall U.S. computer market and claims to be the No. 1 brand in Hispanic households. According to Stamford, Connecticut, Gartner Inc., Dell's share of the entire U.S. PC market is more than 30 percent. That's larger than the market shares of No. 2 HP (which merged with Compaq), No. 3 IBM, and No. 4 Gateway combined. Among Hispanics, "We believe our market share is similar to our overall market share," says Mr. Dell.

But a study of U.S. multicultural markets draws a different conclusion. According to the 2003 study, conducted by Yankelovich Partners Inc. in collaboration with Cheskin and Images USA, 20 percent of Hispanics named Compaq as the computer brand they use most often at home, followed by Dell and HP with 14 percent each. Dell was the top brand in Anglo households with 18 percent, followed by Compaq with 14 percent.

According to a survey conducted by Investor's Business Daily and TechnoMetrica Market Intelligence released in late 2002, Dell was the No. 1 brand among Hispanics and other minorities, but by a narrower margin than among Anglo households.

Mr. Dell believes, however, "We are far and away the most preferred brand overall and I believe that's true with all U.S. ethnic groups."

Dell Inc. CEO Michael Dell founded the Texas-based company in 1984 and pioneered the direct sale of custom-configured PCs. Mr. Dell spoke with Hispanic Business Contributing Editor Derek Reveron after Dell's keynote speech at the 2003 National Society of Hispanic MBAs conference on November 13 in Fort Lauderdale, Florida.

HB: You mentioned in your speech that Dell is addressing the digital divide with low-priced computers and its TechKnow program. Can you expand on this?

Mr. Dell: The program includes 15 middle-school districts across the U.S. It takes kids who are at risk of dropping out of middle schools and gives them an opportunity to participate in a 40-hour after-school program. If they have good grades and stay in the program, they get an opportunity to take a Dell computer home to keep. It has been successful and we plan to expand it. Also, we have made computers more affordable for everyone worldwide and that's a huge contribution to conquering the digital divide.

HB: You said that a goal of the TechKnow program is to bring computers into low-income homes (of all ethnic groups) and change the way they think about technology.

Mr. Dell: These are kids who otherwise wouldn't have access to a computer in their home, and the rest of the family gets an opportunity to be part of the experience. That's a new beginning for that family and those kids that wouldn't otherwise exist.

HB: How successful has the program been?

Mr. Dell: We found with these TechKnow kids that there has been a great deal of success in terms of keeping them in school. A lot of people have been working for a long time to figure out how to keep kids in school. This is one program that has great results. So far, more than 1,500 students have graduated from the program and taken computers home.

HB: According to a study by the Association of Hispanic Advertising Agencies, computer companies spend less than
1 percent of marketing budgets on Hispanics, but the figure should be higher due to Hispanic demographics and PC usage.

Mr. Dell: I've never been a fan of studies like that. We look at how we do with customers, not studies. We know from customers that they love our products. We don't track advertising by ethnicity.

HB: What is Dell's overall view of marketing to new emerging markets?

Mr. Dell: Our market share is far greater and we have enjoyed greater success than other companies. I don't have much to say other than 'look at the results.' We sell products in 190 countries to all types of people in every economy and language you can think of. Our concept of working directly with customers is not an ethnic, racial, or social concept. It's an economic concept of delivering great value and it translates to every language and is universally accepted.

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