Chapter 126 Price reduction

The production lines introduced by Arctic Ocean Food Company are slightly worse than those of Wang Xiaoming's two production lines. After all, they have been transferred by Smith. Their production lines can produce 100 kilograms of potato chips per hour, which is only one-third of that of Dake Potato Chip Factory. Moreover, the eight-hour working system they implemented, which means that their daily output is actually only one-ninth of Wang Xiaoming's. But even so, they felt the pressure because their market is only in Beijing, but now the Beijing market has Dake Potato Chip, which has seriously affected their sales.

"Are we also doing some advertising? Now Dake potato chips are becoming more and more famous in Beijing. If this continues, our market share will become less and less." The person who spoke was the sales manager of Arctic Ocean Food Company, named Liu Chengchang.

"Of course it's good to advertise, but the price is not cheap. It costs hundreds of dollars to advertise for dozens of seconds on a TV station. If you do it for a month, it will cost tens of thousands." Feng Jiantao, general manager of Arctic Food Company, said.

"Then we can't sit still, right? Now our sales volume is decreasing day by day. If we don't invest in advertising, then our sales department will be powerless." Liu Chengchang said. Now his own children no longer like to eat Arctic potato chips, but instead eat Dake potato chips. Even if Dake potato chips cost one piece of 50 yuan, the Arctic potato chips only cost 80 cents.

"We can also use other methods besides advertising. Can advertising be omnipotent? The strategy of war is to know yourself and your enemy, and you will win every battle. I would like to ask, does anyone know the situation of Dake Food Factory?" Feng Jiantao said.

"I know some. This Dake Food Factory is a private enterprise in a rural area under the H-City City. It is a newly established factory with two production lines and can produce 300 kilograms of potato chips per hour. Moreover, their seasonings are purchased directly from the United States, and the technical instructors are also Americans, so they are using American brands. And I heard that they have introduced high-yield American Atlantic potatoes and will no longer use domestic potatoes from next year." Liu Chengchang said. He is a relative of Boss Lin. He heard some news from there, and Liu Chengchang also personally called Dake Food Factory, of course, in the name of a dealer.

"300 kilograms per hour? Even if there are two production lines, a single production line is 50% higher than ours. What about their price?" Feng Jiantao asked.

"The retail price is one yuan, five-year barrel, and the ex-factory price is one yuan, one barrel." Liu Chengchang said.

"I heard that their packaging has been applied for a patent?" Feng Jiantao did not take Dake potato chips seriously at the beginning. He thought that a countryside enterprise could do anything. Even if it advertised on CCTV, their costs would increase. His Arctic Ocean is already an old brand in Beijing. It would be strange if they didn't get into trouble at that time. But unexpectedly, he was a little overwhelmed by the enemy.

"Yes, I didn't expect that they even applied for a patent for packaging. We can't help imitating it now," said Liu Chengchang.

"Who said we want to imitate them? They are just a rural enterprise, and we can't compare to them?" Feng Jiantao said.

"But now people's production capacity is stronger than ours. The seasonings are imported and they are advertising everywhere. We can't compare to them." Liu Chengchang said, who is the manager of the sales department. Now the sales volume of Dake potato chips is more than 1,000 pieces per day, and what about Arctic potato chips? Since Dake potato chips came, there have been no more than 100 pieces per day.

"We only have one way to compete like this, that is, reduce the price, and reduce each bag of Arctic potato chips to three mao." Feng Jiantao said.

"Sanmao? So our profits are not much?" Liu Chengchang said in surprise. He did not expect that the company was not thinking about how to improve its competitiveness, but instead it was a price war, trying to squeeze Dake potato chips out of the Beijing market.

"If you want to reduce the price, you have to shock the other party. If we lower the price, the other party will also lower the price. But will they have such a big price advantage as we have? The freight fee for shipping from H province to Beijing is enough, and their cost will only be higher than that of us." Feng Jiantao said.

The price cut in Arctic Ocean has indeed gradually increased sales, but it is difficult to achieve the previous sales and profits. What made Liu Chengchang depressed is that Dake potato chips showed no signs of price reduction. The only thing they did was to start doing various street advertisements on the streets of Beijing, including banners, light boxes, and even advertisements on buses.

"Brother-in-law, how is the business now? Is it a little better?" Liu Chengchang went to the market to investigate the market. Boss Lin was his brother-in-law, otherwise he would not have received such great support.

"The business is a little better, but the money is not as profitable as before. You did reduce the price, and it suddenly dropped to 30 cents. Even I was very surprised. But our wholesale price also dropped, 30 cents, only 5 cents, my profit is half less than before." Boss Lin said angrily, not to mention that there is another point, the current sales volume has not yet reached the same level as before. Now it would be quite good if we can sell 800 pieces a day.

"This is the market competition. This is a battlefield without gunpowder. We have lowered prices here, and has the potato chips followed suit?" Liu Chengchang asked.

"They also lowered a little, but the wholesale price has not dropped. Now He Guiqiu is more motivated." Boss Lin said, "The price of potato chips has indeed been reduced, but the wholesale price has not been increased. In other words, He Guiqiu's profit now is 10,000 yuan per barrel. He has to sell one barrel and he has to sell three packs to catch up, not to mention that his sales are not more than him.

"You mean that the ex-factory price of Dake potato chips has dropped, but the price approved by those dealers has not dropped?" Liu Chengchang said strangely.

"Yes, it would be great if you, Arctic Ocean, could do this too." Boss Lin said.

"We can only rely on our price advantage to seize the market. It will be fine after this period of time." Liu Chengchang said.

"How long is this period? One month or one year, or forever?" Boss Lin is becoming less and less confident. He has taken the initiative to contact Dake Food Factory and wants to become a first-level distributor in Dake Potato Chips in Beijing.

"To be honest, brother-in-law, I don't know either. Dake Potato Chips have gained a foothold in Beijing now. It's really difficult to squeeze them out without a special way. If you want to distribute Dake Potato Chips, I won't blame you." Liu Chengchang said.

"Now your Arctic Ocean has actively declined from competing with Dake potato chips to seizing the low-end market. Do you know? My sales have indeed increased during this period, but where is the growth? There are many purchases in the suburbs and rural areas, and the sales in the city are basically the same as before. Now, Arctic Ocean potato chips have become low-end food, and Dake potato chips do not need to fight price wars with you, because they don't need them at all, and it has already thrown you away." Boss Lin said.

"I know, but there is nothing I can do about it. After all, I am only responsible for sales in the company." Liu Chengchang sighed. He didn't expect that he would suddenly become such an ending. He lowered his prices and ignored them. In other words, from this moment on, in the eyes of Dake Food Factory, Arctic Food Company is no longer their competitor because Arctic has no right to compete with them.

The market is so cruel. When there are no competitors, Arctic Food Company will unify the potato chip market. However, once a strong competitor appears and Arctic has no corresponding strategy, failure becomes inevitable.

Due to the active price reduction of Arctic Ocean Food Company, their own profits have been reduced a lot, and this year's profits are far from expectations. As for those dealers, they are like Boss Lin, and the boat is easy to turn around. For them, they are just selling one more product and will not affect the overall situation.

The price reduction of the profit of the Arctic Ocean Food Company did not affect Wang Xiaoming's profit. Now his Dake Food Factory quickly accumulates wealth for him with a profit of 40,000 yuan per day. 40,000 yuan per day, which deducts all costs, including raw materials, workers' wages, factory costs, machine losses, freight, and all other taxes and industrial and commercial expenses.

"Zou Dake, it seems that we have to establish an office in Beijing, otherwise so many dealers will not be easy to manage." Wang Xiaoming looked at the sales of Beijing, accounting for almost half of his production. It seems that Beijing is indeed a good market.

"Is it necessary to build an office? We just need to ship the car to Beijing now. There is no need to waste this money, right?" Zou Yuanchao said. The factory is very busy with production now, and it is 24 hours a day, and the goods are sold out. Besides, there is no mistake in Beijing.

"If we want to firmly occupy the Beijing market, we must set up an office, and if possible, I also want to set up a branch there." Wang Xiaoming said.

"Open a branch?" Zou Yuanchao didn't expect that the factory had just started production, and Wang Xiaoming was thinking about opening a branch again. No wonder he could be the boss, but he could only help him work.

"Yes, if this happens, we can save a lot of time and costs." Wang Xiaoming said.

"But it will take about twenty days to send a set of equipment from the United States, and you have to rent a site and hire a worker in the local area. This is a very time-consuming task." Zou Yuanchao said worriedly.

"We may not need to import equipment from the United States this time." Wang Xiaoming laughed.

"You mean Arctic Food Company?" Zou Yuanchao said.

"Yes, it's this Arctic Food Company. They have ready-made equipment and personnel. If we can borrow their equipment, wouldn't it save a lot of trouble?" Wang Xiaoming said.

"But will they be willing? The Arctic Food Company is not at the point where it is going to go bankrupt, and they will not sell the equipment to us." Zou Yuanchao said.

"Who said I want to buy their equipment? It's renting, or asking them to help us with OEM." Wang Xiaoming said with a smile.
Chapter completed!