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The Chinese have this strategy also...
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Posted by Snowmobile [Email] (#686) [Profile/Gallery] (more from Snowmobile) on Tue, 15 Apr 2014 07:55:07 Share Post by Email
In Reply to: Kia, No Snaab, Mon, 14 Apr 2014 16:01:18
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saturate the low end market with cheap junk to damage/kill off the competition at the low end. Feedback profits from this into product development to improve the mid end and then undercut there and saturate the market. Then target a higher end customer, again undercutting on price. Once all the market is trashed, raise prices.

Korean (Samsung,LG) displays have significantly displaced Japanese (Sony, Panasonic)... or Washing machines... etc...

The process does result in an improved product and is a great way to break into the market, recognizing their core competency: low cost labour. As labour costs go up, it is necessary that they move up market.

That said, some things are often lost in the process... The build quality of a Bosch or Miele washer is still significantly better than a Samsung or LG... but is it worth it to the customer? certainly, many KIA owners who DIY etc will agree that the cars are not built to the same standard as many euro brands (not easy at that price), but they work well enough, so fair enough... The euro brands have significantly shot themselves in the foot, by introducing excessively complicated electronics, obfuscation, not keeping costs competitive or quality up, etc. Still, I like them better (largely for philosophical reasons: eg the Swedes actually care about safety, the Koreans care about getting 5 stars to market), but it is true that the differences are finer shades of gray than the black and white of 10 years ago!

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