Abstract It is well known that the price war in the abrasives industry is almost a problem that most industrial companies will face. When the products of many competing companies are exactly the same, any competitor can lower the price to attract all consumers, so in order to maximize profits, it is not smart...
As we all know, the price war in the abrasives industry is almost a problem that most industry companies will face. When the products of many competing companies are identical, any competitor can lower the price to attract all consumers. So in order to maximize profits, unscrupulous competitors will blindly fight price wars until the price is reduced to marginal cost. At this time, producers are deeply mired in price wars and unprofitable. This is economically It has been simplified into the “Berchuande modelâ€; then if the competing companies are smart enough, everyone will achieve a “Nash equilibrium†by controlling the output, and the model for calculating the Nash equilibrium is called the Cournot model. But everyone seems to be not interested in this boring calculation process, so China's superhard material network Xiaobian here directly on the method. 1. Product differentiation: This method can be said to be a method that everyone agrees in addition to the price war, and similarly common practices include bundling, branding, and service. This method does have some scholars prove that it is very useful in theory, but the difficulty lies in how to differentiate? What kind of products should be bundled in industries like abrasives that look like quality and price? The feeling of building a brand is a bit far from being able to hydrolyze the thirst. If you are fighting for service, what kind of service do you need to fight?
First of all, one thing that companies need to make clear is: Is the customer very aware that the quality of the products you supply is better than other low-cost competitors? If the company determines that the customer buyer does not know, in fact, I do not recommend that the company cut the price too much, so it seems to tell the customer that your quality is similar to that of the low-priced one. You have to ask for a higher price, and now you are afraid of doing business. Going down the price. So, if you really provide buyers with better products, then why not compete with your company to lower the price, even if you want to compete, you must use technical means to suppress them!
2. Use the attraction effect and the compromise effect for price positioning: The product positioning here is not to enter the market segment. Find a location that the company feels appropriate to satisfy the customer, but ask you to take it. A suitable price position to pass some important information to the buyer's customer through the price.
The question now is: If you want to cut the price, how can you drop it to see that you are not worried about the buyer not buying your product, but to fall down with confidence. Start the theoretical science below, first explain the screenshots with two documents~
In the abrasives industry, products can be streamlined into two attributes: quality and price. For the buyer, the higher the quality, the better for him; but the higher the price, the more he pays, the more unfavorable he is. In the above picture, we compare the products A and B first. A's attribute 1 (Attribute 1) is better than B, but B's attribute 2 (Attribute 2) is better than A. If the buyer only compares A and B at this time, he must be entangled, because A and B are making him a difficult one. The decision is to choose a product with high quality and high price, or choose a product with lower quality and better price? At this time, he particularly hopes to have a product with high quality and good price. Although he knows that there is no such good thing under the sun, but the sale has to be done, how can the transaction be facilitated if the seller does not suffer and the buyer is willing? ?
At this time, there is a product C that saves "lower quality price concessions" in water and fire. Why? Because the two attributes of C are not as good as B, the quality of C is not as good as B and the price is higher than B. At this time, the buyer feels that B is simply too good. You say that A is of high quality, but it lacks cost performance. I think that choosing B means that I am sensible~ so I choose B~ (this is the attraction effect, that is, the appearance of C makes it easier for buyers to make the decision of choosing B)
If you enter the AB selection set is D? D will obviously set off A better, buyers will feel that they choose A to be rational. So the title owner, if you don't have D, do you think your product's product location is awkward? How do you price it so that your home makes it hard for buyers to choose?
Eclectic effect
Immediately after the above attraction effect analysis, in the case of neglecting the products in the price range of low-priced products, only the highest price, the second highest price and the third highest price are considered, we can separate the three into the A in the above figure. B, C (or B, C, D), at this point the buyer finally met his two-pronged approach - find a medium-quality, medium-priced B (eclectic effect) ~ so it seems that the second highest price is full full. However, if the low-end products with the lowest price range of low-price competition are added, the attraction effect will make the advantage of the third high price stand out, and the advantage of the second-high price will be reduced a lot. Therefore, the actual competition is not as simple as written in the consumer behavior literature. Ok, after analyzing the strengths and weaknesses of the enterprise products, we can finally make suggestions happily~
In order to prevent competitors from entering and increase their own competitiveness, combined with the Porter Five Force model, the company is best to do the following three things without considering alternatives entering the market:
1. Do a good job with the upstream supplier, sign with him to let him only supply you in the region ~ If there are other competitors desperately in the future, you can consider a certain proportion of the profit with the supplier.
2. Occupy the product line at various price points, so that competitors can be seamlessly inserted, and join the service for price war in disguise.
3. Hold on to existing customers. According to the past trading history, give some discount sweetness~
The product line can be changed from the previous one to four. The fourth line is the soy sauce, but it is very necessary.
(1) A low-priced products: although the quality is low, the quality is worth the price;
(2) B low-priced products: Although the quality is low, the quality is worth the price, in addition to providing some additional technical services;
(3) High-end products in C: good quality products;
(4) D high-end products: good quality + good service products.
The design of multiple product lines is not designed to drive competitors out of the market, but to increase the difficulty of competitors entering the market on the premise of diverting existing competitors. The design of the product lines (1) and (2) can make the buyer very unhappy when making the decision to buy the opponent's product, because if the buyer map is cheap, he will not choose the opponent's product, if the buyer maps the service, select the product. Line (2) is just as wise. The design of the product line (4) is also indispensable. It tells the buyer that my original high-end products are also very cost-effective. Come and pay attention to me.
Most people think that market competition is to drive their opponents out of the market or to fight their opponents without any help. Since then, they have been the boss of the market. In fact, very few competitors can do this because it not only hurts the enemy. Thousands of self-destructive losses, but also not conducive to market prosperity and the market to grow bigger, in addition to their own development, as long as they are holding back the opponent.
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