Lei: The five difficult decisions behind the success of Red rice

The success of Red rice is not a strategy, a thinking, a model so simple. I believe that sometimes management details also determine success or failure, especially in the face of major issues, the leader's vision, will and decision-making power. From the birth of red rice to the process of creating brilliance, Lei made five difficult decisions. Said its difficult, because these decisions directly touch the direction of millet and the core, such as brand, profit, cooperation and so on, and every time to have a huge discard. Decide one: do red rice mobile phone, starting from mobile version, millet adjust product positioning. In April 2012, Lei announced that it would not do the low-end configuration of mobile phones. Millet mobile phone price of about 2000 yuan, positioning for a fever and health. However, after 3 months, the red Rice mobile phone began to project, not the middle end, no longer fever. Why is there such a decision? Investigate the reason. At the Red Rice press conference, the mobile Terminal Company participated as the largest distributor, Lei is the mobile terminal Company, what is the general proposal to do a moving version of Red Rice; at the Beijing International Symposium on Microelectronics hosted by the Commission, Lei said that the Director of the Committee had recommended him to do a drive to promote the domestic industrial chain of red rice. It's all a scene. Lei to the user size and user value, only to do the midrange products is not enough. Facing up to the monopoly of Apple and Samsung, the difficulty is too great, there may be a high profit, but definitely not a large-scale. Down is the best choice. First, three operators scramble for 3G users, move the contrarian trend, in 2012 years to achieve one of the three world, and put more resources, do TD mobile phone will have volume. Second, to MediaTek as the representative of the chip enterprises, mobile phone parts prices significantly lower, leading the era of thousand-yuan intelligent machine, do thousand-yuan machine promising. Third, before the millet mobile phone only unicom version and the telecommunications version, the use of millet mobile phone six or seven is mobile users, they use mobile 2G network, do TD can increase the ARPU value of such users. It seems easy to decide, but not really. From the brand, the Millet brand and the red Rice brand, will either strengthen each other, or will make the brand hope, it is likely that the scale is not, but hurt the fundamental. From the product positioning, from the enthusiasts to the public, it is easy to make existing millet users lose identity identity. From the market competition, this is a red sea, the participants in order to scale-oriented, price war is inevitable, there may be reduced to a profit yell attempt. Lei chose to do it. Moreover, in June 2012, the third round of financing 216 million dollars, determined to expand the product line. Decision two: Red Rice Mobile version has two versions, failed to pass the test of abortion, for the pursuit of quality pay the price. New mobile phones Before the release, are to do preheating publicity, that is, the major technology, digital sites in the so-called spy photos, exposure and so on. So does red rice. In the warm-up publicity, there have been two versions of H1 and H2, according to the configuration, the price is 799 yuan and 999 yuan, the former ready to do mobile custom version, contract sales, the latter go public version of the route, online sales. And, two have passed the Ministry of the network Test. Things are not always as expected, H1 in the mobile custom warehousing test, appeared to askProblem。 Several rounds of testing down, still failed. Lei need to make a decision, H1 is after the OEM enterprise testing, the Ministry of Industry testing, there should be a few rounds of Lei experience and improvement. He can choose not to make a custom version, mobile phone listing through the official website sales. However, Lei choose not to miss quality problems, let H1 abortion. Lei There is a sentence, outside people no matter how scold, as long as not product quality, millet can endure. He said there is confidence, because the quality of the product has sacrificed a lot. For example, H1 abortion, bring huge cost loss, Millet has under 400,000 orders, BOM cost more than 20 million yuan, there are tens of millions of research and development costs into the water. In addition, the product strategy also needs adjustment, two models of mobile phones to jointly expand sales strategy, landed on a mobile phone. Decision three: The price of red rice is not 999 yuan but 799 yuan, beyond the price war, so that opponents can not fight back. The original price of red rice (ie H2) is 999 yuan, but it is 799 yuan when it is released. What happened between this? The author learned some facts, millet really with mobile talk is 999 yuan, mobile has begun to publicize material production and sales deployment. In the week before the conference, Millet sales plan was exposed, reportedly lei very annoyed, after a variety of trade-offs, decided to homeopathy straight 799 yuan, with the previous version of the same price abortion. You can also see that the sale of the project exposure is a publicity campaign to let users know that the price of 999 yuan of cost-effective red meter mobile phone is coming. Then, one more surprise at the press conference, users, Scream! It seems easy to read, and Lei's trade-offs are really difficult. Because the price of 799 Yuan is a big gamble. To believe that the millet mobile phone hardware or make money. Lei has said that Millet mobile phone sales 300,000 is break-even point, after more than 10% of the profit. What about the red rice? I initially calculated, does not contain the need to share the development and other costs, only the BOM, tax, operating costs, and so about almost 820 yuan. Pricing 999 yuan or more reasonable, competitors will not follow up in the short term, there is a better profit expectations. What if it's priced at 799 dollars? Want to make money, there are only two ways, one is sales, with the supplier bargaining power increased, the cost will be reduced, and the other over time, mobile phone parts prices will fall. Initially estimated, the red rice profit and loss point is around 3 million parts. Lei to the supplier's intention is only 5.006 billion, so down, is expected to take about 5% of the profit. A price, the difficulties left to the late operation, to maintain a high volume of sales, and can not have inventory. Where is the starting point for Lei gambling? Believe that the user's eyes, can identify cost-effective mobile phones, but also know that users take advantage of the psychological, so that the cheap to become the user's own Word-of-mouth marketing power. Decision four: To show the operator, agreed to move to do the non-contract version of the Red Rice mobile phone. Red rice and mobile cooperation, hope to take the contract machine way. On the one hand, with the help of mobile coverage of all levels of the city's online business hall, so that the phone quickly reached the three or four-line city, to find the largest consumer market thousand Yuan Machine。 On the other hand, with the help of mobile subsidies, further let consumers, the rapid formation of sales scale. The wishful thinking is wrong. Red Meter mobile phone cost-effective, as well as online publicity and sales, instant seconds kill, a machine difficult to seek and so on, enhance the brand value of mobile phones, for offline sales, there is a lot of profit space. If no subsidy can be sold very well, why should the move to invest in subsidies? As a result, only custom contracts have arisen. Can be pre-installed mobile own business, without the need for subsidies, and can be sold to a higher price downstream channels to earn the difference. What a good thing! Millet is indeed watching the move to take away the profits of red rice. In the "rewinding:" The total sales of red rice mobile phone nearly 6 million units, offline channels to the credit to Wei, I said, Millet is good, there is its purpose. One is to find the size of the line, mobile by virtue of a strong channel capacity, the sales of red rice mobile phones should be done on the online sales, at least in the scale of sales, gave the red meter corresponding return. The second is to pave the way for further cooperation, after all, the number of mobile users is far more than unicom and telecommunications; Decision five: And Huawei Die Knock, after all, is playing a price war, more precisely, is the user's heart of the defense of positioning. Red rice profit and loss point is 3 million sales, what time to achieve it? At the end of last November. Red Rice finally saw the dawn, like in the water holding his breath for a long time, finally can go to the surface of the breath. And at this point, the red Rice Unicom version also listed, you can do a very promising. Unfortunately, it was a coincidence. Red Rice just to profit, Huawei launched the Glory 3C, all aspects of the configuration and red meters similar, slightly higher, the price is 798 yuan. Less than 1 yuan of red rice, provocation is greater than the challenge. Lei how to choose? If the red rice price is lowered, wait until the next profit and loss point. If not, it could be influenced by Huawei's Glory 3 C. Lei did not immediately return fire, want to earn some first. However, the situation is not optimistic. Analysis of Red rice online sales data, before the Tuesday Red Meter mobile version of the volume is 100,000, the entire last December, five consecutive Tuesday sales are 50,000, and, here contains the red m mobile version and just listed on the sales of the Unicom version. Not capacity problems, lei worry about excessive volume will affect the sales effect, psychologically, or afraid of Huawei. Baidu Search index, also roughly confirmed the situation at that time, before the Glory 3C out, the Red Meter index is far higher than Glory 3C, out, quickly more than red rice, and continue until the red Rice mobile version of the price. This January, the red Rice Mobile version reduced to 699 Yuan. Calculate again, the profit point will be in 4.005 billion department. Choose a die knock, rather than make money, but also to maintain the highest cost-performance positioning in the user's heart. Red rice success, the current sales near Chiban, in the traditional handset manufacturers, a single paragraph so high sales are also very rare. Overall, the red-meter hardware itself has an estimated profit margin of 3%. Of course, its success also includes an increase in the size of the user, as well as revenue outside the hardware. On this phone, more can reflectLei does not rely on hardware to make money, rely on accessories, software and services to make money ideas. Lei is very satisfied with the red rice, because there are a number of difficult decisions throughout the process, and today's results confirm the correctness of the decision. Note: The article "rewinding:" The total sales of red rice mobile phone nearly 6 million units, offline channels to take credit to Wei after the issue, there are readers to find my theory. Focus on two points. One is the scale of sales. Said the sales of red rice near Chiban, 5 million of the magnitude is not correct. I have explained in the article that as at the end of February, the sales of red rice 500多万部. March and early April red rice sales force is relatively large, mainly with competitors and red Rice into the end of the promotional period, to fast shipping for the continuation of products, one months sales 300多万部, the overall 900多万部. The other is about the line below the channel to express the problem. It's really not appropriate. For example, mobile phones to operators such as mobile, chain retailers such as Di, they are also in the online shopping mall for sale, calculate the line? It might be more appropriate to say it in another way. The amount of the Red meter mobile phone distribution is greater than the amount of retail, which is different from the original strategy of millet. Retail is a cost-effective route, directly to the user, distribution is the traditional method of mobile phone sales, rapid formation of scale, the process, channel costs again, the user is not a cost-effective mobile phone.