At this time, all sorts of VCD players brands had appeared all over the world. The market for traditional video cassette players had shrunk further. All the manufacturers were losing money, and some of the big brands had stopped producing traditional video cassette players after selling their remaining stocks. This was because they had obtained the authorization for the VCD patents.
As for those smaller companies, they declared bankruptcy. Even if they were to sell their VCDs at a loss, no one was willing to buy them. It was just like how mobile phones were going to be popularized soon. Who would buy a pager?
These big companies were still negotiating with each other to set the retail prices to ensure their profits. But Wind & Rain Electronics made a crazy decision!
Wind & Rain VCD player discount promotion!
VCD players were invented by Wind & Rain Electronics. The initial prices were also set by Wind & Rain Electronics. The rest of the VCD manufacturers had gotten the authorization from Wind & Rain Electronics. But when other VCD brands were lowering their prices, Wind & Rain Electronics's VCD players were still selling at over 3,000 RMB.
At that time, Sony and other companies were still laughing at them. Do you think Wind & Rain Electronics is a big brand? Do you think your brand value is higher than Sony? You want to use the added value of your brand to increase your profits? You are destined to fail.
Wind and Rain VCD player's sales had been declining. When Norio Ohga knew about this news, he was overjoyed.
Wind and Rain, Aiwa, and Aiwa? You all think you can sell your VCD players at the highest prices because you all are the first to produce them? Are you all regretting now? Your high prices will make you all fail.
But now, Wind and Rain VCD players suddenly announced that they will have a discount on their products. The retail price of each VCD player was reduced from over 3,000 RMB to 1999 RMB! This was a few hundred RMB cheaper than the 2,000 RMB sold by other companies.
At the same time, Aiwa VCD players and Aiwa VCD players also announced a discount promotion. This promotion was the same as Wind and Rain!
The rest of the brands were dumbfounded. This way, the consumers will no longer buy their VCD players. After all, these three brands were the most experienced brands in the VCD industry!
This year, the RMB suddenly depreciated, causing the exchange rate of RMB against other foreign currencies to plummet. Last year, the exchange rate between RMB and USD was still around 5.8: 1. Now, it has become 8.2: 1. That is to say, 50 USD patent fees is equivalent to more than 400 RMB!
The price difference between Wind and rain VCD players and other brands of VCD players is about 50 USD. This made other companies hate Feng Yu.
Wind and Rain Electronics was too despicable. They had lowered their prices, and if they followed suit, then their actual selling price would be around 200 USD. After deducting more than 100 USD, how are we going to make any profits? Didn't Wind & Rain Electronics earn most of the profits?
The most hateful thing is if Wind & Rain Electronics had lowered the price when they licensed the patents, they would not be in such a passive position. But they saw the sales were good and expanded their scale.
But the profits of each VCD player had dropped by 50 USD. This was a huge loss to them. If it was before they expanded their scale, it will be fine. But after they expanded their scale, the profits will drop by a lot. How can they continue to compete?
The reason why Feng Yu did not lower the price was to wait for those brands to expand their scale.
Feng Yu knew the cost of a VCD player very well. In the past, Wind & Rain Electronics's cost was more than 1,000 RMB. But as they expanded their scale, the workers were more skilled, and the efficiency of the equipment was higher. The cost had dropped to around 600 RMB. That means Feng Yu's profits were still higher than other companies. This was because the cost of other companies was more than 1,000 RMB.
Those companies had just expanded their scale, and their workers were not skilled enough. Wind & Rain Electronics also did not sell their core technologies to them. This was why they could not lower their cost temporarily.
At first, it was not a big deal. Their cost was only around 1,000 RMB, and they could sell it for around 2,000 RMB. But after deducting the taxes, transportation, sales, etc., their profits were not high. At least in the Hua Xia market, their profits per VCD player was only about 50 USD.
Feng Yu had lowered the price, and those overseas brands could not continue to do business. Now, there were only two solutions. The first was to produce in Hua Xia. This way, they could get rid of the taxes and transportation costs. But they will need to invest in a new factory. This cost was not small. The second solution is to withdraw from the Chinese market and consolidate their base.
Most of the overseas brands had withdrawn from the Chinese market. Some of the overseas factories of AIWA also started to withdraw from the Chinese market. These factories were also producing Wind and Rain, Wind and Rain and other brands of VCD players.
But they realized that by doing so, wouldn't they be giving up a portion of the Asian, European, and American markets?
How can they do this?! Aiwa had just opened up the market, and it was almost the harvest season. If they gave up now, all their efforts would be in vain.
So, Aiwa and Aiwa decided to withdraw from the Hua Xia market and continue to compete in the other markets. Their factories in those markets were bigger than Aiwa's factories. What's there to be afraid of?
Most importantly, Aiwa and Aiwa could not withdraw from the VCD market. Once they withdraw, they will lose the opportunity to enter the VCD industry and the DVD industry.
What should they do? Aiwa and Aiwa had to lower their prices to the same standard as Wind and Rain VCD players. Even if they lowered their prices, they would still get some profits. But if they withdraw from the VCD market, they will not get any profits!
… …
Lowering the prices for promotions was the simplest and most direct way to snatch the market share. In his previous life, Feng Yu had seen many brands using this method to quickly snatch the market share. When the market share belonged to them, they would increase their selling prices to get back their profits.
With Feng Yu's move, Wind and Rain VCD players' market share in Hua Xia increased to 50%, and it was still increasing. The sales were increasing day by day.
The overseas sales also increased rapidly. Feng Yu had the upper hand again.
Jiang Wanmeng and the rest suddenly realized that after the price reduction, their profits did not decrease, and their sales volume increased. These few months, the sales of VCD players had exceeded their expectations. Wind & Rain Electronics's profits had not decreased!
With the authorization fees, Wind & Rain Electronics's profits had increased by a lot.
At this time, Feng Yu introduced the second stage of his promotions. Buy a VCD player and get a free movie and music VCD. It was not only a New Year's Eve Gala VCD.
Buy 1 get 2 free. This was a big promotion.
Most of the people bought a VCD player to watch movies, listen to songs or sing songs. The cost of buying a VCD player was not a small amount. It was the same as buying a car and petrol. You might feel that you did not spend much every time you bought a VCD player. But at the end of the month, it was not a small amount.
The cost of a VCD, including the copyright fees, transportation fees, etc., was not more than 10 RMB. But this 20 RMB discount had increased the Wind and Rain VCD player's sales.
"General Manager Feng, our sales are increasing rapidly again. This promotion is a good deal!" Jiang Wanmeng said excitedly.
"This is nothing. Continue with the promotion. Those who bought our products can participate in a lucky draw. The first prize is a cash rebate. The second prize is a 50% cash rebate. The third prize is a bladeless fan … … The last prize is a movie or music VCD. Everyone can win!"
Feng Yu used some of the promotion methods from his previous life. Those big brands did not know how to promote, and they were destined to fail!
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