We talked about the significance of advertising. In fact, through the scale effect, to a large extent, it can effectively reduce the average cost of a single commodity and thus reduce the price of the commodity. However, there is a necessary premise for all this to be realized, that is, advertising can play these roles.
What if an enterprise can achieve scale effect and form a brand without advertising? So can it achieve a cheap price without advertising?
The answer is yes!
The most typical case is Xiaomi mobile phones of the previous two generations. At that time, Xiaomi was born out of nowhere. It was a typical example of scale effect without advertising. At that time, the iPhone in the mobile phone market was more than 5000, and the flagship prices of HTC, Samsung and moto were about 4000. The price of Xiaomi 1999 configured in the flagship was like a nuclear bomb, so why did Xiaomi dare to hit the dimension reduction in 1999 What about the price?
One important reason is that Xiaomi’s cost structure is not the same. At that time, Xiaomi did not have advertising and related channel expenditure, and did not need huge advertising expenditure to maintain its scale.
How does Xiaomi achieve scale effect without advertising?
There are two reasons:
The first is that Xiaomi’s trump card is word-of-mouth marketing and Internet Marketing under the premise of high-performance configuration. “Born for fever” Xiaomi generation press conference invited half of the Internet circle. This kind of detonation effect is even better than many huge advertising fees.
Second, Xiaomi chose to focus on a mobile phone when moto, Samsung and HTC were all in the air and sea tactics at that time, so that resources could be concentrated. Under double factors, Xiaomi’s first generation sold 900000 yuan.