Recently, Metz, a German TV brand owned by Skyworth, launched the sculpture series OLED TV with a stand-alone price of 199,999 yuan and a set price of 359,999 yuan, announcing its entry into the ultra-high-end market. The limited production of 10 units per month and the strategy of booking delivery three months in advance make this TV even more rare.
Skyworth’s logic in building Metz is: China has entered the post-material era, and the trend of high-end consumption upgrades is obvious. Metz’s entry into the ultra-high-end market is just in time. The question is, does the creation of Metz conform to the rules of luxury brand operation?
Let’s first take a look at the background of Skyworth’s acquisition of Metz.
In November 2014, Metz declared bankruptcy. The reasons for bankruptcy are as follows:
First, outdated technology. Compared with its status as a television manufacturer, Metz's more important identity is that it is the only manufacturer in the world that produces a full line of flash products. It began producing camera flashes in 1952, launched the world's first automatic flash in 1968, and launched the world's first automatic flash in 2012. The first touch screen portable flash. Flash is an outdated technology. Although it has an irreplaceable status in the hearts of photography enthusiasts, no one can stop the wave of mobile phones replacing cameras, not even Kodak. In 2012, Kodak declared bankruptcy, and two years later, Metz also declared bankruptcy.
The second is the lack of core competitiveness. In the field of TV manufacturing, Metz has always focused on the high-end customer market. From a global perspective, it is a local brand, with 90% of its sales in Germany, and global sales of only 100,000 units. At the same time, it has no core competitiveness in technology research and development and production and manufacturing. Before bankruptcy, Skyworth was OEM for it.
Third, the content ecology is insufficient. In the past, televisions were a hardware-driven industry. As long as the manufacturing technology was excellent and the brand was influential, sales would not be too bad. But with the rapid development of the Internet, it also has an important identity: home entertainment center. This requires TV manufacturers to have a complete content ecosystem. Only by matching high-end content with high-end hardware can we create a truly viable high-end TV brand.
Less than half a year after Metz went bankrupt, it was acquired by Skyworth for US$8 million. It seems like a very good deal.
In 2004, TCL paid a very heavy price for acquiring the color TV business of Thomson of France. Two years later, TCL founder Li Dongsheng wrote a special article "The Rebirth of the Eagle" to reflect on the lessons of internationalization.
Skyworth’s acquisition of Metz is obviously a business idea. Compared with Thomson, Metz is a "light company" with less than 600 employees and a small factory. The most valuable thing is its brand, channels and patents.
In 2014, the domestic color TV market experienced its first decline in 30 years. Skyworth's senior executives judge that China's color TV market has entered the stage of stock competition and it is difficult to maintain rapid growth. Overseas will be the greater growth point in the future.
This year, Skyworth has taken a major step towards globalization, setting up branches in Indonesia, Vietnam, Thailand, and the Philippines, and at the same time settling its Southeast Asian manufacturing base in Indonesia.
Skyworth chose to expand its market share in economically underdeveloped areas through low prices and high volume, while its two peers, TCL and Hisense, chose to vigorously promote their own brands overseas.
In 2014, Hisense launched VIDAA TV for the U.S. market. Overseas self-owned brand sales exceeded US$1.3 billion. In 2015, it acquired Sharp's Mexican TV factory for US$23.7 million and took over Sharp's TV business in North and South America. .
In 2014, TCL Group achieved operating income of 101 billion yuan through international layout, of which overseas income accounted for 47%.
Due to poor sales of its own brands and insufficient brand recognition, Skyworth’s overseas performance was not as expected. Therefore, Skyworth hopes to open up the European market through the acquisition of Metz, thus opening a hole for globalization.
However, Metz, which was acquired by Skyworth, performed poorly in the global market. Five years later, Metz's market share in Germany is still pitifully low, accounting for 3% of sales and only 1% of sales. In a country like India, where TV sales are big, Metz’s sales are minimal.
We originally expected Metz to carve out a path for Skyworth’s internationalization, but unfortunately, not only did it fall short of expectations, but it also consumed resources.
It is almost certain that Metz, which has performed poorly in the global market, will find it difficult to be reborn in China.
First, it does not comply with the rules of luxury goods. Almost all luxury goods in the world are driven by dreams. The reason why users are willing to pay a high price to buy an impractical thing is to have a dream world. With the development of technology, the iteration of TV is accelerating.
The function of the product and the technology behind the function are not the main factors that affect consumers, but the dream.
In 1995, Dubois and Paternault conducted a study on luxury brands in the United States. A survey was conducted on consumers' attitudes, purchasing habits and brand awareness towards 34 luxury brands through questionnaires. A dream formula was obtained through data analysis:
Dream=-8.6 0.58X Brand awareness-0.59X User purchasing behavior
This formula quantifies the value of dreams for the first time and explains it scientifically It explores the relationship between brand recognition, consumer behavior and dream value.
In this formula, -8.6 means that when brand awareness and user purchasing behavior are zero, the brand's dream value is negative. In other words, if a brand is not well-known, then consumers have no desire to consume. At this time, its dream value is negative.
Without popularity, there is no dream. Therefore, the most important task for Metz at the moment is to build awareness.
Creating dreams for users and leading them into the dream world step by step is the first step to the success of luxury goods. Next, the brand needs to be built through a series of systems to implement the dream. Almost all luxury goods have offline experience stores, with the purpose of creating dreams for users from all aspects of the senses. With sales limited to 10 units per month and annual sales in the tens of millions, it is obviously difficult to support its investment in brand experience.
The second is that it has defects in product power. In the field of audio, there are many top luxury brands, such as Berlin Sound. Obviously, in the field of television, Skyworth also wants to "reproduce" a "Voice of Berlin". Although audio and color TVs both belong to the category of major home appliances, the underlying logic is completely different.
Audio is closely integrated with the art of sound, and its usage scenarios are more personal and personalized, so it has a huge group of audiophiles. As long as it has top quality sound, there will always be people paying for it. Personalization and artistry make it have the potential of luxury goods. Even the world's top sports car brand Bugatti, which costs tens of millions, also wants to cooperate with Berliner Sound, which shows how great its luxury potential is.
Unlike audio, color TV technology updates faster. In some features, it is close to computers. Luxury goods are often associated with extraordinary quality. When the core technology updates become faster, the extraordinary quality established will soon lose its charm.
Looking at the global computer industry, there has not yet been a successful luxury brand with global influence.
Because every one or two years, the core chip technology undergoes major upgrades, which means that computers bought at high prices today will become obsolete in two years.
This is why it is difficult for real luxury brands to emerge in the field of color TVs, but it can be found in the fields of bags and watches because they never go out of style. Hermès bags can be used for a lifetime, and the more they are used, the more they retain their value. However, color TVs are eliminated every one or two years, and the more they are used, the more they depreciate.
Color TVs, like computers, are driven by technology. In terms of core technology, Skyworth is not at the top of the pyramid. Samsung and TCL master OLED technology; the manufacturing of OLED panels relies on LG; Hisense leads the way in the research and development of laser TVs. The lack of core technology makes Metz lack the persuasiveness that luxury goods should have in terms of quality.
As the entertainment center of the living room, color TV is an ecosystem. In addition to top-level hardware, it should also be equipped with top-level content and perfect audio and video art. Only by organically combining the three can its quality be maximized. However, due to the semi-open usage scenario of the living room and the different needs of family members, it is difficult to achieve unification of this "extreme".
In 2019, B&O, a luxury TV brand that like Metz focuses on high-end people, saw both sales and profit margins decline. The superposition of multiple factors, coupled with the impact of the epidemic, makes Metz's failure in the Chinese market a high probability event.
Why launch the Metz brand in China after five years? The real purpose of Skyworth is probably to influence high-end people through the launch of Mezi, thereby providing a stepping stone for Skyworth to "go higher". To put it bluntly, Skyworth hopes Metz will score points for itself.
This may ultimately be wishful thinking. For example, the sports car brand Bugatti was acquired by the German Volkswagen Group. Will it have a huge effect on promoting the Volkswagen brand to the high-end market? Will Tata Motors Group's acquisition of luxury car brand Jaguar improve Tata's class? Obviously not.
Metz not only cannot add points to Skyworth, but there is also a potential risk: if Metz does not operate well, it will have a negative impact on the Skyworth brand. Just like the Bugatti sports car, once it is messed up by the Volkswagen Group, it is estimated that Bugatti's loyal fans will not agree.
If Skyworth wants to build Metz into a luxury color TV brand recognized by Chinese people, it must reorganize the underlying logic. The creation of a luxury brand has never been a business. It is a long journey based on beautiful dreams, extraordinary quality, and artistic pursuits.
If you want me to say, Skyworth should not have this press conference that is botched by technology companies and has no new ideas. Its appearance should be dreamy, and it should be in harmony with a top art exhibition in the world, A tight-knit group of top artists. What's more, you shouldn't reveal the price card in a hurry, as this will appear very low.
Showing your trump card means facing everyone’s test. Skyworth is obviously not ready yet.
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