I have been using a certain brand of product for quite long. They're very good in quality and the price is reasonable. It has been getting more popular over the years, and they even got listed in the local exchange.
Recently, there's a noticeably drop on the quality, I wonder why. I imagine the situation could be like this?
1. Start a new brand, offering great quality product at reasonable price, let say they can sell 10,000 every month. So, imagine if they cut cost of $0.1 for each item, they can only save 10,000*0.1 = $1000 only, not worth to do at all!
2. They have a bigger market share, now they can sell 1,000,000 every month and since they are more popular now, they have more control on the price, they have more bargaining power, so they can always increase the price a little bit without problem. Let say by $0.1 for each item, they can earn 1,000,000 * 0.1 = $100,000 more each month.
3. Now, they are one of the major players, they can sell 100M every month, they can virtually control the price until the consumer cannot afford, and they are now ready to reduce the quality, let say $0.1 for each item, they can earn 10M more each month.
Is that what is happening all these years? I wonder.
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