As of last week, Dell announced that it's going to cut back on mail-in rebates and make sale costs extra accessible to customers following complaints that the process for receiving the sale cost was too complex.
Analysts believe this will aid increase Dell’s customer relations but not necessarily its sales. Dell, the world’s largest personal personal computer maker said that item costs will stay the exact same.
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Dell’s sales have been down in recent quarters with tougher competition from their number one competitor Hewlett-Packard. Dell which sells directly to consumers by means of the web and via phone has had complaints of their poor after-sale performance. In the early 90’s Dell’s percentage growth was a lot greater and analysts wonder if Dell can once again reach these numbers.
An analyst with Cross Study says, "Dell is facing plenty of challenges. HP is just reinvigorated, which is 1 of their biggest challenges. Their competitor is back."
Dell shares ended down 68 cents, or 3 percent, at $21.70, extra than the Merrill Lynch Tech 100 index's (^MLO - news) 1.6 percent fall.
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Dell anticipated a reduction of approximately 70 percent per item line in the number of promotions for U.S. customers and modest businesses. Promotions connected to a single product line would decline by 80 percent.
Reductions will take impact inside the next 12 to 18 months, starting with the Inspiron notebook computers and Dell monitors.
Moors and Cabot analyst Cindy Shaw stated, “People hate rebates” and she believes this is really a positive move for Dell.
Some analysts thought Dell would introduce price cuts to contend with competitors Hewlett-Packard and Acer Inc. They continue to diminish Dell’s long-established cost benefit thanks to less costly components and a lot more competent manufacturing.
In May, Dell publicized its plans to lower prices and is spending $100 million to enhance customer service by hiring over 2,000 sales and support staff.
Dell’s senior vice president of property and little enterprise groups, Ro Parra said the cutback in promotions won't impact the “net price” that customers pay but make the procedure of buying a laptop or computer less complicated.
Parra commented to reporters that customers don’t like rebates and only about 80 percent redeem them. He also stated "They are problematic, and our intent is to lessen them over time."
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Dell too as other retailers like Greatest Purchase Co are cutting back mail-in rebates. They're not considerably of an incentive to consumers for the reason that they must fill out forms, send product codes and then wait several months to obtain a check.
Dell’s new focus on existing promotions might be paperless rebates which make analysts wonder if this can motivate buyers to make the most of the offers.
Study analyst Cross stated "My biggest question is, what the financial impact of this is? Should you do not get many hits on mail-in rebates, and now you are just going to go to instant rebates or cost cuts, then that hits everyone."
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at 4:59 AM EDT
