Haier group is a multinational manufacturing company providing consumer electronics and home appliances. In 1984, it was been founded in Qindao, Shandong province, China, with a joint-venture contract with Liebherr, a Germany’s refrigerator company. Under the development of over three decades, Haier has transferred from a single-product company to a global manufacturer with multiple product lines. It has expanded its brand to brown goods and white goods. Nowadays, Haier is the 4th largest white goods manufacturer in the world. The business scope of Haier is technology research, product development and manufacturing, trade and financial services (Haier, 2015).
2.0 Company Pricing Strategy
Haier’s generic product …show more content…
Obviously, Haier’s strategy of price discrimination is successful. Based on the latest data released by Euromonitor International in 2004, Haier was ranked again as the Number One Global Major Appliances Brand with 10.2% retail volume market share (Haier, 2015). Honestly, Haier is willing to involve value war instead of price war, because Haier can increase the quantities of customers and expand its market share to improve its network externality, so that Haier can obtain the power of pricing.
Since Haier started to improve its supply chain management in 1998, Haier has built strong and complete logistic network so that Haier is able to balance the high quality with low cost. In 2013, Haier’s cost of good sold was 8.59 billions USD. About the revenue, Haier charges every customer the maximum price that customer is willing to pay for each unit consumed, thereby capturing the entire amount of consumer surplus (Vanhoose, 2003). Thus, by implementing high pricing strategy, the profit margin of Haier is respectable. In 2013, the Gross Profit Margin of Haier was 14.676%, the Net Profit Margin was 3.271%. In 2014, Haier achieved a global turnover of 200.7 billion RMB, a total profit of 15 billion RMB.
From a nearly bankrupt refrigerators manufacturing company to a multinational corporation, Haier has implementing high pricing strategy all the time. It