Chapter 572 - Boycott from the Three Giants
“Li Li, are you sure that you want to start a price war with Luo Workshop?”
Chai Zhiying was shocked and said, “But their flagship product is a Chinese medicine beverage–the TCM herbal drink! It is because of the drink that our customers end up buying bread and pastries from them. Sumir cannot replicate such a drink,” she continued.
“It’s okay, just do as I say.” Su Li said nonchalantly, as she tidied Su Xiaobei’s collar.
Chai Zhiying nodded, “Okay, I’ll call the Head of Sales right now and tell him to lower our prices to cost price.”
Xiao Luo, on the other hand, was already thinking of a counter solution. Although their main product was the TCM herbal drink, the bulk of their revenue came from their bread and pastries. If Sumir lowered their prices to cost price, customers would only buy the Chinese medicine drink from Luo Workshop and everything else from Sumir. Based on Luo Workshop’s current financial standing, it is not the time yet to go head-on against Sumir.
How should they deal with the coming challenge?
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As he expected, when Sumir lowered the prices of their products, the customers went back there. Of course, they still purchased the Chinese medicine drink from Luo Workshop, but that was it. For bread and pastries, they bought those from Sumir.
Some alert media had detected the competition between the two companies, and they started reporting on the battle for market share between Sumir and Luo Workshop. They would go on to the streets and interviewed random citizens of Xiahai for their opinions on this battle between Sumir and Luo Workshop.
“Opinion? Of course, we are going to sit back and enjoy the battle!” said one customer.
“I am neutral. Let the big corporates fight. We will get the best bargain for bread and pastries,” said another customer.
“I think Sumir would eventually emerge as the ultimate winner. Although Luo Workshop is a big name in Jiangcheng, Xiahai city is Sumir’s home ground. Sumir has a huge group of loyal customers here. Luo Workshop won over customers because of their Chinese medicine drink. Since Sumir has lowered their product prices to cost price, Luo Workshop is pretty much done for,” an interviewee commented.
“According to my analysis, Luo Workshop will definitely fail. Firstly, Luo Workshop cannot match up to Sumir in terms of economic strength. Secondly, Luo Workshop has actually affected the sales of Huayao Corporation to a certain extent due to the Chinese medicine drink. Just watch. Huayao Corporation will join in this battle in no time. Lastly, oh, never mind...., there’s no ‘lastly.’ In summary, Luo Workshop is heading for doom!” commented another observer.
There were two kinds of interviewees – the indifferent ones and those who believed that the Luo Workshop would definitely fail.
“Old Xiao, what should we do now? Your wifey has started a price war, and we stand no chance of winning! If we can’t come up with a solution, we will turn out to be just a beverage company! If our competitors know about this, we will become the biggest joke in the industry,” said Zhang Dashan, who was at Luo Workshop’s Xiahai office. Seeing that their business had been deteriorating severely, he had to call Xiao Luo for help.
Xiao Luo ignored the lame jokes and asked, “Is the product appeal of our TCM herbal drink to our customers high?”
“Yeah, it’s pretty high, and that’s all that they are interested in. They wouldn’t even spare a second look at the bread and pastries. All of them would buy the drinks from us and going to Sumir for their bread and pastries. Although our drink does produce a significant profit margin, the main bulk of our profit still lies in the baked stuff. If we can’t find a way to increase the sale on those, then just selling the Chinese medicine drink cannot get us out of this situation.” Zhang Dashan said.
Xiao Luo looked at Zhang Dashan with a gleam in his eyes. “Then we shall come up with a promotional event. Anyone who purchases two hundred dollars and above worth of baked stuff will get a Chinese medicine drink as a freebie!” he said.
“Oh f*ck, how could I have missed out on such a simple trick. Okay, we’ll do that,” Zhang Dashan said, ending the call and going ahead to execute Xiao Luo’s suggestion.
At this point, the TCM herbal drink was no longer the center of the competition. Sumir had initiated the price war on the bread and pastries, and Luo Workshop could not last against Sumir due to its weaker financial strength. So lowering their prices was out of the question. The key to retaining their customers now was the drink itself, so they must make use of its demand.
After Xiao Luo’s idea was launched, people felt that purchasing from Luo Workshop was a better option. They wanted the highly sought after Chinese medicine drink. And they could only get that if they bought the baked stuff. Hence, Luo Workshop ended with customers flooding into their retail stores again, leaving the retail stores of Sumir relatively empty.
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When Xiao Luo went over to Su Li’s apartment for breakfast again, he realized that not only Chai Zhiying was there, but Shen Qingyan was there as well.
She was decked in a black high-cut power suit and wearing a pair of heels decorated with silver-grey crystals. When she saw Xiao Luo coming, she immediately strutted over and gave him a dose of her sarcasm. “Xiao Luo, your friend Zhang Dashan is soooo amazing!” she said.
“What’s wrong? Why are you pissed so early in the morning?” Xiao Luo had guessed the reason, but he pretended innocence.
“WHAT’S wrong?” she asked.
Shen Qingyan stood with her arms akimbo, “They are a baking company but decided to sidetrack into the health supplement industry. It is as good as taking the meat directly from the mouth of a tiger. Why doesn’t he just die?” she scoffed.
Xiao Luo laughed awkwardly and said, “He didn’t mean to take Huayao Corporation’s market share. It was his last resort to outplay Sumir in the battle for market share. Rest assured, after Luo Workshop settles down, Dashan will surely return the market share to you guys.”
“I want him to stop immediately!”
Shen Qingyan told him in a hyper-aggressive manner. It made perfect sense that she was furious as Luo Workshop’s action was equivalent to snatching the cake from the person who had always had it.
Xiao Luo frowned and said, “I don’t think that he can do that now.”
“Then I won’t feel sorry to start a war from my end. It’s not just my Huayao Corporation, but Renhe Medicines is joining in as well. The entire Xiahai will be standing together to oppose Luo Workshop. “Can Luo Workshop survive that?” Shen Qingyan hissed.
Xiao Luo remained quiet and went straight to the table for breakfast. Fine, let them all join in, let’s see who the winner will turn out to be!
Su Li stared coldly at Xiao Luo. “You’re not going to talk to your friend?” she said.
Xiao Luo smiled and said, “There’s no such need. Dashan knows what to do.”
“He knows?”
Chai Zhiying smirked. “His Luo Workshop will soon become the public enemy number one, just like a rodent. Soon, there won’t be a place for Luo Workshop in Xiahai,” she said.
“I don’t think it’s that serious.” Xiao Luo said.
“Hah... Do you actually think that Luo Workshop can win over the combined forces of our Sumir, Ms. Shen’s Huayao Corporation, and Renhe Medicines? The boycott from the three giants will destroy Luo Workshop to its very core. Save your witty talk as I have investigated Luo Workshop’s business information. Its total assets worth is at most sixty billion, and its liquid asset does not exceed two billion. When Luo Workshop’s financial strain finally breaks, they are bound to borrow from the banks. With the three of us intervening, there’s no way any bank in the entire Hua nation would lend to Luo Workshop,” Chai Zhiying scowled, predicting Luo Workshop’s destiny.
Xiao Luo just smiled and replied, “It’s pointless to tell me.”
“I know, but you are a good friend of his. I hope you will tell him this and convince him to get out of Xiahai as soon as possible before he incurs a huge loss!” Chai Zhiying said.