Question about market behaviour: price vs quality

[aelf]

Evidently, there's are signs of market failure in this situation. As a couple of people have mentioned, consumers lack information, no thanks to advertising, and they don't take into account longer-term savings in terms of product quality and having access to good product support.

So what can be done to make the market more efficient?

Ever since Dell screwed me, I have sworn to never buy a Dell, never accept a job where I will have to work on a Dell, and even refuse to troubleshoot my friends and family's Dell machines. What they did: I sent my laptop to them for a factory warranty repair. The warranty expired while it was being shipped back to me. When I got it back, the problem was not fixed. When I called them, the CSR literally said "Your warranty has expired" and hung up on me. I will never do business with them again, and advise others to treat them like the scurvy dogs they are.

Good for you I've been lucky with my own Dell, but almost 3 years on I think it's starting to reach the end of its reliable life. Had to repair it once after about a year, but thankfully it was a relatively painless process.

I think they're trying however their competitors have learned a lot of lessons from Dell. HP can now custom produce and deliver a machine in 3 days. Something Dell owned for a long time. Add poor service and it becomes viral against Dell.

Well, if they are trying, why aren't they trying to get their edge back in terms of customer service, on the back of which they apparently built the company?

I think it's just the opposite. VAR's big (like CDW) and small can now compete on price and add huge value that Dell can not. HP, Acer and Lenovo all sell through those channels. Dell is trying retail outlets and is struggling to penetrate that market too but they're a reasonably new entrant to that space.

But it seems to me that customer service is almost universally bad. I don't think HP and Lenovo have good reviews in that department. Not sure about Acer, though.

 

[JerichoHill]

Doesn't the article you cite say that it is? You said yourself that the market has "perhaps reacted to the situation."

Amadeus for the win. Glad I didn't have to point that out.

Further evidence
http://moneycentral.msn.com/investo...&C9=2&CF=0&D7=&D6=&symbol=DELL&nocookie=1&SZ=

What do you see?

A departure from the SP500 trend in Apr 2005 lasting about a year. While the market has recovered since the recession, Dell stock is still down 60%.

That was a really easy question to answer

 

[aelf]

Amadeus for the win. Glad I didn't have to point that out.

Further evidence
http://moneycentral.msn.com/investo...&C9=2&CF=0&D7=&D6=&symbol=DELL&nocookie=1&SZ=

What do you see?

A departure from the SP500 trend in Apr 2005 lasting about a year. While the market has recovered since the recession, Dell stock is still down 60%.

That was a really easy question to answer

Uh, but that's not the issue.

It's been 6 years since the first article, and all along the company knew about the problem. Nothing has really changed. The market doesn't seem to be pushing the company hard enough, for whatever reason. That's the problem, which you'd realise if you had bothered to read the thread more carefully.

 

[Whomp]

Well, if they are trying, why aren't they trying to get their edge back in terms of customer service, on the back of which they apparently built the company?

It's re-building that culture and that comes from creating the environment to lead change. I think it's especially important when your business model is built on the call center or online channel versus selling through VAR's or retail stores.

Let me give you an example. I had a client complain to me when he called into a call center of another division at my company and was not getting satisfactory answers to his questions. When he suggested that maybe he move his business elsewhere the phone rep said "that's your perogative". Though the relationship was never at risk for me, I elevated the situation. Since the phone reps take notes on client relationships her boss addressed the problem, called the client and took care of the situation the same day.

But it seems to me that customer service is almost universally bad. I don't think HP and Lenovo have good reviews in that department. Not sure about Acer, though.

I would agree and I'm not sure what it is that drives that culture. Microsoft may not be of much help to them either. I think Dell pushed the envelope on supply chain efficiency and logistics but lost track of their customer along the way. That's not something that's easy to recover from. On the other hand, Apple's "genius bar" could be one reason why they rank so high in customer service. Even my computer novice mother is thrilled with her experience with Apple so they've built all kinds of raving fans. Personally, I've had good service from Lenovo (IBM servicing?).

It's been 6 years since the first article, and all along the company knew about the problem. Nothing has really changed. The market doesn't seem to be pushing the company hard enough, for whatever reason. That's the problem, which you'd realise if you had bothered to read the thread more carefully.

They may be trying but "saying change" and "effecting change" are two different things. The market has made its statement on Dell by punishing their market value. Not the case with Apple or HP.

 

[amadeus]

Uh, but that's not the issue.

It's been 6 years since the first article, and all along the company knew about the problem. Nothing has really changed. The market doesn't seem to be pushing the company hard enough, for whatever reason. That's the problem, which you'd realise if you had bothered to read the thread more carefully.

But you only posted a year-to-year drop in Dell's market share. Six years ago, Dell was the world's largest manufacturer of computers. Today, HP and Acer have dethroned Dell. In 2004, Dell's market share was 18.2%, versus the 13.2% share they have today. Over the course of six years, Dell lost 5% of the global home computer market to competitors.

 

[Bill3000]

But you only posted a year-to-year drop in Dell's market share. Six years ago, Dell was the world's largest manufacturer of computers. Today, HP and Acer have dethroned Dell. In 2004, Dell's market share was 18.2%, versus the 13.2% share they have today. Over the course of six years, Dell lost 5% of the global home computer market to competitors.

I think his point was that Dell hasn't responded to the market.

 

[amadeus]

If that's the case, then I guess Dell's stockholders were right in dumping it and consumers were right for switching to other manufacturers. The market at work.

 

[Mise]

If that's the case, then I guess Dell's stockholders were right in dumping it and consumers were right for switching to other manufacturers. The market at work.

Exactly... Customers are getting better quality, just not from Dell. That is, if they want better quality.

 

[JerichoHill]

Uh, but that's not the issue.

It's been 6 years since the first article, and all along the company knew about the problem. Nothing has really changed. The market doesn't seem to be pushing the company hard enough, for whatever reason. That's the problem, which you'd realise if you had bothered to read the thread more carefully.

What does a 50% value reduction since 2005 by the market on Dell's worth mean then?