Dell Dings Promotions
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Expect to see fewer promotions hawking Dell computers at low, low prices.
In a move to bring customers back and curtail confusion, the number 1 computer maker today slashed its rebate program and promised better information about its bottom line prices.
Starting in August, U.S. promotions aimed at home and small business consumers will drop by up to 80 percent, Dell said.
While the phased-in changes will take up to 18 months to implement, the new policy will be first seen with its Inspiron notebook and Dell television ads.
Along with promotions for individual products, consumers will see a 70 percent drop in product line marketing.
The move is aimed at cutting through the clutter of rebate programs that muddy the price picture for consumers. Some consumers, after purchasing a Dell computer, would often see the new promotion and question whether they received the best deal.
"It became increasingly difficult for sales reps to understand all the promotions," added Ro Parra, Dell's senior vice president, Home and Business Group.
At one point, Dell offered 30 to 50 promotions per fiscal quarter, Parra told reporters during a conference call today.
Parra emphasized that the change would not effect the price consumers pay. Instead, without the layer of promotions, people will have a clearer idea of how much the PC will cost. The policy shift allows the company to focus on communicating the value of products, rather than prices.
The change is aimed at one basic goal: simplicity. Dell hinted at the changes in May when it announced a $100 million investment plan.
Dell recently took some heat after some consumers complained that certain TV ads were misleading because they claimed they couldn't purchase the computers at the prices as advertised, according to the Advertising Standards Authority. Dell disagreed with the complaints and argued that the systems were available for the prices as advertised.
The Dell executive said today's promotion changes were "entirely a reaction to customer feedback." The computer maker also launched a new ad campaign entitled "Purely You."
Dell will also expand the length of current warranties to one year and will cover more problems. As part of the enhanced warranty, the company has trained 5,000 technicians and announced DellConnect, a remote diagnostic tool. It also plans to reduce the number of mail-in rebates in favor of an electronic version.
Earlier this year, Dell caught the industry by surprise when it decided to add AMD processors to its PC lineup. The move brought Dell in line with competitors HP and Sun who previously gave AMD the thumbs-up.
Parra refused to talk about Dell's recent stock performance, instead telling reporters to "stay tuned" to upcoming financial reports. Dell has seen its stock slide faced with competition from HP.