Large transcoded files

I just wanna ask if there is a way to drastically reduce the size of the files that encoder produces when transcoding video files for dvd authoring, such as the m2v file (mpeg2).

The original mp4 file weighs around 750mb while the transcoded m2v file goes up to 3.5gb and also reduces the quality of the video, of which I seek to avoid as well.

Any suggestions?