Why has Xiaomi Auto been slow to announce its price?

Since Xiaomi Auto held its technical conference, the price has become the focus of discussion. But after multiple prices were denied, the insurance price and other factors also made the price of Xiaomi Auto seem confusing. Why hasn't Xiaomi Auto announced the price yet? Is it because the price has not been determined yet, or is there another reason? In this article, we try to analyze it with marketing knowledge.

On March 12, Lei Jun announced on Weibo that the Xiaomi Mi SU7 will be officially launched on March 28, but no one knows how much the car will cost.

Since Xiaomi announced its plan to build a car in 2021, consumers and industry observers have been curious about the pricing of this upcoming new player. Over time, this curiosity has turned into a strong sense of anticipation, and every piece of gossip about the price has sparked a heated discussion. However, Xiaomi does not seem to be in a hurry to satisfy this curiosity.

In November 2023, Xiaomi’s first model SU7 was unveiled at the Ministry of Industry and Information Technology, followed by an official press conference on December 28. Even in March 2024, Lei Jun announced on Weibo that SU7 will be officially launched on March 28. The price of Xiaomi Car has not yet been revealed, becoming the biggest "unsolved mystery" in the technology industry this year.

So why has Xiaomi Auto not announced its price? What is the psychological game behind this strategy? How does it affect consumers' expectations and the company's market strategy?

01 Cost Factor

The R&D and production of Xiaomi cars involve high costs, including technology R&D, raw material procurement, manufacturing, and supply chain management. Changes in these costs directly affect the pricing of the final product.

For example, as an important component of the cost of electric vehicles, the price fluctuation of batteries has a decisive impact on the pricing of the final product. Take lithium batteries as an example. Due to the fluctuation of raw material market prices, the cost of lithium batteries changes every year, and sometimes even fluctuates greatly.

This year, as the production capacity of all links in the battery value chain from battery raw materials and components to battery packs increases, the prices of major battery metals (especially lithium) have fallen sharply. At the same time, China's battery production is in oversupply, resulting in a sharp drop in the price of lithium batteries after the end of 2023 compared to 2022. In this case, if the car is priced too high at the beginning, it will face the dilemma of no one buying it after it is launched on the market.

Although Xiaomi also makes mobile phones, its pricing strategy is completely different from that of cars.

In the mobile phone field, companies can start pre-sales within a short period of time after the product price is announced, and achieve large-scale shipments a few months later, with smaller fluctuations in costs and market prices.

However, in the automotive industry, it may take a year or even longer from product pricing to mass shipments. During this period, the cost of raw materials, especially batteries, may change significantly. If Xiaomi Auto is priced at 199,000 yuan when the product is released, but when it is mass shipped a year later, the price of raw materials rises and the original price can no longer cover the cost, the company will suffer a loss in profits or even a loss.

Therefore, before officially announcing the price, Xiaomi must still be conducting cost optimization and control to ensure that product pricing can both cover costs and be competitive.

02 Competitive Strategy

Of course, cost is only one aspect. What ultimately determines the price of goods is not cost but market supply and demand, which involves market competition.

Zhuge Liang proposed two important strategies in "Longzhong Strategy":

1. Occupy Jingzhou and Yizhou
2. When there is a change in the world, send troops in two directions.

Note that the important thing here is “wait for changes in the world”.

Occupy the position first and then wait for market changes to take action. This should also be Xiaomi Auto’s initial strategy.

At the beginning, the market trend was very much in line with Xiaomi's expectations.

At the end of 2023, NIO, QINGJIE, and LIAN successively released their most expensive models, namely NIO ET9 with a pre-sale price of 800,000 yuan, QINGJIE M9 with a pre-sale price of 469,800 yuan, and LIAN Mega with an estimated price of less than 600,000 yuan. In early 2024, Xpeng's latest MPV model X9 was officially launched, with a guide price of 359,800 to 419,800 yuan.

The prices in the new energy market seem to be getting higher and higher. Many people joke that BBA can afford it, but domestic cars are unaffordable.

It was in this context that someone asked Lei Jun on Weibo about the price of SU7. Lei Jun's reply, "Are there any competitors under 50?" did not seem too surprising. At this time, if the announced price of SU7 was significantly lower than other high-priced cars, it might have an advantage.

But who would have thought that the situation changed so quickly. Around the Spring Festival, a large number of new energy vehicles started to cut prices. BYD and Tesla were the first to start cutting prices, and finally, Qauto, Lingpao, Zeekr, Xiaopeng and other cars also followed the trend and cut prices significantly.

At this time, Lei Jun’s words “Is there any competitor within 500,000?” are a bit ironic.

Although the price cut trend has an impact on the launch price of SU7, it is much better to know this information than to announce a high price first and then passively accept the blow and cut the price in the face of the current situation. At least Xiaomi has more time to measure what price the product should be sold at in the market to be more competitive.

03 Exposure Effect

In one study, psychologist Zajonc asked subjects who did not know Chinese to write Chinese characters. Some characters were viewed 5 times, some 10 times, and some 25 times. The researchers told the subjects that the characters were adjectives, and at the end of the experiment, the subjects had to guess whether the characters were positive or negative. Although the characters had no meaning to the subjects, they agreed that most of the characters they saw represented good things.

This landmark 1968 study by Zajonc and similar studies have found that the more frequently people are exposed to something, the more positive they perceive it to be.

This is the mere exposure effect.

Coca-Cola has been advertising for many years to help consumers build a positive impression of itself.

Xiaomi doesn't even need to advertise. As long as it reveals some news about Xiaomi Car from time to time before it goes on the market and then arouses people's speculation about the price, it can achieve the brand exposure effect for free.

At the same time, consumers’ anticipation of price itself is similar to anticipating the unveiling of a new thing, which can promote the secretion of dopamine in the brain, a neurotransmitter associated with pleasure and reward.

Whenever new news about the price of Xiaomi cars comes out, the pleasure brought by this anticipation stimulates consumers' brains and increases their anticipation for the final price reveal until the price is finally announced.

This constant speculation and anticipation also fueled the discussion about Xiaomi Auto on social media. Both regular users and KOLs are constantly discussing and speculating on the price of Xiaomi Auto, but due to the lack of official information, this discussion is like an endless game. This not only increases Xiaomi Auto's media exposure, but also deepens the interaction between the brand and potential consumers.

This strategy is quite similar to the "hunger marketing" strategy adopted by Xiaomi in the mobile phone market. By creating a sense of urgency of "wanting but not getting", Xiaomi can stimulate consumers' desire for scarce information, thereby increasing the psychological appeal of the product. When consumers are curious and looking forward to something, their final willingness to purchase the product may be stronger.

04 Delayed gratification

The "marshmallow test" was conducted by Stanford psychologist Walter Mischel in the 1960s. In this experiment, Mischel and his team presented 4- to 6-year-old children with a choice: they could eat one marshmallow immediately, or wait until the researcher left the room for a while and returned to get two marshmallows.

Subsequent studies found that children who were able to delay gratification performed better in many aspects of their future lives.

This experiment highlights the importance of self-control and its impact on long-term success and satisfaction. Delaying gratification is not just about waiting for a future reward, but about a deeper understanding of self-control and goal-directed behavior.

Xiaomi Auto's strategy of not announcing prices immediately can be seen as a way of utilizing the psychological effect of delayed gratification to increase the expectations and interests of potential consumers.

By keeping the price mysterious, Xiaomi not only aroused consumers’ curiosity about the product price, but also increased the overall anticipation for the product launch . From a psychological perspective, when people invest time and energy in anticipation of something, their perceived value of that thing tends to increase, and this phenomenon is widely used in marketing.

In this process, Xiaomi not only increased its brand exposure by maintaining consumers' interest and expectations, but also potentially enhanced consumers' willingness to buy.

05 If you keep thinking about it, there will be a response

Soviet psychologist Zeigarnik once conducted a study in which he observed that waiters in a restaurant could remember the details of orders that had not yet been paid, but once the order was paid, the waiters quickly forgot the specific contents of the order.

Based on this observation, Zeigarnik designed a series of experiments in which participants began to perform a series of tasks and were then suddenly interrupted before they were completed. The results showed that the interrupted tasks were more easily remembered by participants than those that were completed.

After research, Zeigarnik came up with the Zeigarnik effect named after her: the task that is started will create a specific tension in the person's mind, and this tension will increase the cognitive accessibility of related content. When the task is completed, the tension will be eliminated, but if the task is interrupted, the tension will continue. Through the continuous tension, the content will be easier to access and recall.

The Zeigarnik effect can be summarized in an idiom: "If you keep thinking about it, it will come true."

For example, the pre-sale pricing + final payment method used by the current promotion platform uses this principle. Consumers first pay a deposit during the pre-sale, but have to wait a week before paying the final payment. During this week, they always think about this matter in their hearts and go to see the goods they paid the deposit for every day, which invisibly increases the platform's traffic and the possibility of buying other goods. This mood can only be relieved after he pays the final payment a week later.

Xiaomi Auto cleverly aroused consumers' curiosity and expectations by delaying the announcement of its car prices. This continued suspense not only maintained consumers' continued attention to Xiaomi Auto, but also deepened the brand's impression in consumers' minds. In this process, the Xiaomi brand was frequently recalled and discussed, further strengthening the implantation of the brand image.

In addition, this strategy also stimulates consumers' expectations and interest, and over time, consumers' curiosity about the unknown price turns into interest in the product itself. When Xiaomi Auto finally announces the price, this long-established expectation and interest may turn into actual actions of test driving and purchasing, thereby increasing consumer conversion rate.

Lei Jun said on Weibo that after the official launch date of SU7 was announced, the number of people who made reservations at the store increased by more than 100,000 in one day, which is the Zeigarnik effect at work.

Conclusion

In this article exploring the reasons behind Xiaomi Auto’s unannounced price, we analyze it from five different perspectives: cost factors, competitive strategy, exposure effect, delayed gratification, and “If you keep thinking about it, it will come true.” Each factor reveals the complex considerations behind Xiaomi’s strategy, which not only reflects the marketing strategy, but also reflects the brand’s deep understanding of consumer psychology.

Through these strategies, Xiaomi has not only successfully maintained a high level of visibility for its upcoming cars in the public eye, but has also deepened potential consumers’ curiosity and expectations about the brand. This approach is both a consideration of cost and market dynamics, as well as a psychological and information war, with the goal of creating the greatest market impact when the car is officially released.

Author: Xunkong

Source: WeChat public account "Xunkong's Marketing Revelation (ID: xunkong2005)"