Nongfu Spring's promotional strategy at a supermarket in Guangzhou is indeed eye-catching, and its prices are even close to or lower than some people's estimates of production costs. The following is a detailed analysis and summary of the situation:
Promotional Prices & Production Costs:
THE PROMOTIONAL PRICE: 8.8 YUAN PER PACK, INCLUDING 12 BOTTLES OF 550ML NONGFU SPRING, THAT IS, THE PRICE OF EACH BOTTLE IS ABOUT 0.73 YUAN.
Production cost: According to the manufacturer's relevant information, the production cost of a bottle of Nongfu Spring is about 0.5 yuan, plus transportation costs and management expenses. Even taking into account the economies of scale and cost reductions that may result from promotions, the price of RMB0.73 is still well below the normal cost of listing, unless Nongfu Spring employs extreme cost control measures.
Public opinion turmoil and unsalable pressure:
Reference article 2 mentions Nongfu Spring's decline in sales and supermarket removal due to public opinion turmoil. This may force Nongfu Spring to adopt an aggressive promotional strategy to absorb inventory and alleviate the pressure of slow sales.
Market Competition and Brand Strategy:
Nongfu Spring has always occupied a leading position in the drinking water market, but in recent years, the market has become increasingly competitive, especially in the high-end drinking water market. Nongfu Spring may use promotional strategies to consolidate its market share and increase brand awareness at the same time.
Consumer Reaction and Market Outlook:
The success of a promotion ultimately depends on the response of consumers. If consumers think it's a good opportunity to buy, then Nongfu Spring may succeed in digesting the inventory and even enhancing the brand image. However, if consumers have doubts about the quality of the product or the reputation of the brand, then the promotion may not be as effective as expected.
Conclusion and Future Prospects:
Nongfu Spring's promotional campaign is a bold attempt to deal with the unsalable pressure brought about by the public opinion turmoil. Although the promotional price is much lower than the cost of production, it is also a short-term marketing strategy. In the future, Nongfu Spring needs to continue to pay attention to market dynamics and adjust product strategies to ensure the sustainable development of the brand and the stability of market share.
In short, Nongfu Spring's promotion is a strategy that will depend on consumer reactions and changes in the market environment.