For years now, Dell's been telling everyone and their mother that their PC is cheap. Earlier in the game, all of dell's marketing effort has been centered around mail-in rebates, special offers, and sub-500 dollars PCs.
When you tell a lie a thousand times it becomes true. Not to say that Dell boxes aren't affortable, but they definitely burn that association into the minds of the public.
Dell = Affortable.This has the unfortunate side-effect of becoming something else:
Dell Box = CheapThis is Dell as a brand being diluted, very slowly, but very surely.
Cheap = Poor Quality
Dell Box = Poor Quality
As Dell captured and saturated the lower-end of the PC market, they see a problem. They're not known in the server market. They have to get into the market by the only way they know how: make products of same or higher quality and sell them cheaper than the competitors.
Only now, the problem mutated from "not known in the server market" to "not trusted by the server market customers". Dell Box = Poor Quality, right? A natural extension would also have the same implication on Dell servers, switches, routers and other high end products.
Back when I was at Edo Performance, we were worried about lowering our prices too much. All special offers have a definite expiration date, and there will be no more special offers for a while. We don't want our customers to get used to the pattern and be waiting for sales instead of buying when they want to. Price cut offers are targeted for those that are "on the fense", undecided, not those who already want to buy.
This is what happened to Dell. Their coupons came out so often, so regularly that whenever we want to get a computer, we just know that another coupon season is just around the corner, and we wait. The list price could be $500, but we expect to get it at $400 with coupons, and Dell box would therefore only worth $400 to us. It's hard to sell that to us at original price ever again.
I'm not a marketing guru, so if any of these doesn't make sense, correct me in the comments. :)
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