Chapter 569: The SituationThe purpose of Zhang Dashan"s arrival at Xiahai was more than catching up with Xiao Luo. He also intended to share some of Xiao Luo"s workload here. After all, the business of Luo"s Workshop headquarters in Jiangcheng was pretty much stabilized, and it would not make a difference with his absence. However, Xiahai was different. The work in Xiahai was as good as venturing into an unknown land, and a tough fight with the local merchants was expected.
It was the beginning of the month and Luo"s Workshop"s grand opening in Xiahai!
Before this took place, Luo"s Workshop had already employed plenty of marketing and public relations strategies. The promotional events in various retail stores have been kicked started too. Guided by their market research, the sweetness of all their pastries and cakes was reduced to suit the preference of Xiahai consumers. On top of that, the variety of their products had been increased based on the feedback of their prodigal researcher, Luo Qi. Luo Workshop now offered at least thirty more varieties of products compared to Sumir.
However, besides the initial popularity thanks to their grand opening, the retail stores of Luo Workshop had seen a major plunge in sales and could not retain the consumer base as good as Sumir. On the other hand, Sumir was totally unaffected by Luo Workshop at all.
[At Luo Workshop Xiahai Division]
Xiao Luo was seated on the center chair in a smart black suit, his right hand drumming on the table rhythmically. Before this, he would never believe that Luo Workshop could have failed miserably like now. Everyone knew very well that Luo Workshop had ample time to prepare themselves in this war, and they had spare no effort in the research and development of products, marketing, and retail store decorations. In summary, Luo"s Workshop had changed substantially according to Xiahai"s historical and cultural basis to better attract the Xiahai customer base.
“Everyone, tell me about your take on this issue.”
Xiao Luo announced slowly as he knew that Luo"s Workshop needed more than just himself now. They had to brainstorm and relook at their brand strategy and determine the root cause of the problem.
Besides Zhang Dashan, Li Zimeng, and Luo Qi, key members of Luo Workshop"s higher management and the retail managers were also present. They even did a simultaneous video conference with the senior management members from the Jiangcheng headquarters. In other words, every key stakeholder was present at this meeting. Zhang Dashan had solidified his position as the second in command, so Xiao Luo did not have to worry about overshadowing his power in this meeting.
A man stood up and expressed his opinion. “President Xiao, I believe that the people purchase products from Sumir out of a habitual reason,” he said, “Five years ago, there was a bakery franchise named "Feixue" trying to enter Xiahai"s market, and they too were met with the same reaction as we have.”
Xiao Luo nodded and asked, “What do you think we should do to solve this problem?”
“Old habits die hard, and trying to change the habits of Xiahai consumers would undoubtedly be a lengthy process. Besides, we cannot allow this deficit to drag on too, so we have to change from within,” the man answered.
“Go on.”
“According to my research, eighty percent of the consumer demographic belong to senior citizens. They are more concerned about healthy eating and physical wellbeing. So if our company could come up with a pastry made of traditional Chinese medicine and sell it with the effects of reducing high blood pressure and cholesterol, I strongly believe that this product would be a hit!”
Luo Qi reacted immediately and responded, “We are no doctors and know nothing about Chinese medicine. How could we develop such a pastry?”
“Director Luo, that is a form of marketing strategy. Our pastry doesn"t really need to possess such effects. All we need is to have our customer to believe that it is true.”
“Isn"t this lying?”
Luo Qi frowned and turned to Xiao Luo, “Big boss, this is a bad move. We cannot do that, ever. The company"s credibility must come before all else, especially in the food and beverage industry. If our name is ever tarnished, then it would be extremely difficult to regain our customers" trust.”
Many nodded as they agreed with Luo Qi. They could not accept using deceit even for the sake of increasing the company"s sales.
Xiao Luo instructed everyone to settle down and asked, “Anyone else?”
A female manager stood up and said, “I have conducted a survey myself too. I picked ten retail stores randomly and surveyed fifty customers from each store. When asked why they chose Sumir over Luo"s Workshop, their answers were exactly the same. Sumir was a trusted brand in Xiahai due to its long history here. Many believe that many money-grubbing businesses in the Hua nation were willing to replace dried meat floss with cigarette filters to extend their products" shelf life. On top of that, they would also add in a lot of preservatives in the pastries for the same purpose.”
“Don"t they know that Luo"s Workshop is a trusted brand with a long history too?” Zhang Dashan asked.
“President Zhang, we are indeed a trusted brand with a long history, but that is based in Jiangcheng. However, in terms of national reputation, Luo"s workshop is indeed a very minor company. Although we did have great national coverage last year, people would naturally forget about us after some time. To the people of Xiahai, we are just another unfamiliar name with no background. To put it into an individual"s perspective, a familiar man would always win our trust over a stranger, isn"t it?”
As he heard that, Zhang Dashan was speechless, and he was humble enough to know that Luo Workshop was not a national name.
The female manager then said, “The key to raising our sales is to earn the trust of the people of Xiahai. I think we can publicize the images and videos of how the pastries were made in the factories. Leaving these materials in the retail shops all day round and showing them every step in our production process. This would help them understand how our pastries are made from start to end. Of course, we have to display a positive image and pay attention to details such as hygiene issues.”
After she finished speaking, everyone started discussing, for that was a really bold idea.
“Would this cause a leak of our business secret? These products are the researchers" hard work, and our rivals could gain these recipes without any effort. This is to our disadvantage, right?” Li Zimeng put down her pen and raise this question.
The female manager replied, “That is a very relevant question. So we would take out the most important steps of the process as most of our customers are not professional bakers. They will not notice if we did not reveal all the steps, and believe that what we are showing them our entire process openly.”
Everyone nodded as this sounded sensible.
“President Xiao and president Zhang, allow me to share my two cents,” another manager said.
He was a male manager, and he stood up before he continued. “As compared to Sumir, we are considered outsiders. Besides the issue of cultural adaptation, we actually had no advantage in terms of our pricing. Just like what manager Wong had said, eighty percent of our customers are senior citizens,” he said, “The senior citizens have a vastly different view on pricing compared to the younger generation. Pricing will be prioritized over everything, and they will be inclined toward lower-priced products. To their understanding, pastries are all the same, and this being the case, why wouldn"t they choose the cheaper option? This is totally in keeping with their frugal nature.”
“Do you mean that we should lower our prices?” Zhang Dashan asked puzzled.
The male manager nodded and replied, “Yes. We should not be focusing on profits now but build our roots and ingrain our brand in the Xiahai market. We should redefine our financial objectives to be able to cover the total operating cost. After we have secured market share, then we can think about higher margins.”
“We might not win in a price war against Sumir!”
Li Zimeng was calm in her response and said, “On top of Sumir"s impressive cash reserves, its owner, Su Li, has a very close friend. She is the president of Huayao Corporations, and if we ever wage a price war, we would not stand a chance against both of them.”