How to fight high quality price war

If the price war is considered to be the marketing of the mentally retarded, the idea itself is not smart. It's a fact that Chinese companies, known for their price wars, are the last winners in the industry.

Think price war is low level of marketing, this is the thinking of clean, think price war does not make money, this is simple thinking. It is strategic thinking that you can launch a price war bravely, play a high price war, and make money in a price war.

Price wars are not for anyone. Not the industry giant words, wage war also no one will you, the industry's price system will not change . Can launch price war, can change price system by price war, finally can change the industry pattern, such price war how not to fight ?

In addition to the lower price than others, what co-ordination measures are not, this is at the edge of survival often play tricks, this behavior can not be called price war. Unilateral ght, no one to challenge themselves to play with themselves, this practice is not a price war. If you think of this thinking industry leading price war, then committed "to their own heart, the human belly" error.

Those who win the price war industry giants, often prefer to be socially misunderstood, also do not want to disclose the true meaning of winning price war. As long as you can enjoy the success of the achievements, the social misunderstanding is what?

A good price war, not only to expand market share, but also to clean up the door, you can earn free advertising, but also profitable. However, it is not easy to put technical content in the public's view of simple price wars.

One of the profit models of price war: "Future Sales" type price war

At the beginning of the price war is losing money, won the price war will make money. The key to making money is "future sales", so call it "future sales" type of price war.

Classic Case: White elephant

The mid 1990s, the rise of the white elephant at the beginning, when the profit of instant noodles is very high, mainstream products are 70g/bag packaging. White elephant developed a 100g/bag of products, put on the Shanxi market. The price of white elephant 100g/bag is only a little higher than that of rival 70g/bag, the price is very competitive.

Just think, the weight difference is so big, the price is only a little bit, no matter to everybody attractive. However, according to the cost structure of the white elephant at the time, this price is not profitable. Why not make money? Because the white elephant at that time the yield is lower, the fixed cost is high, the high fixed cost spread to the lower production, the cost is certainly very high.

However, the white elephant eventually made money. Because of the price war, so that the sales of white elephants sharply expanded, quickly become Shanxi has the largest sales of enterprises. The cost structure has undergone a fundamental change with the expansion of the sales share of fixed costs.

In the process of price war, competition products dare not challenge, because if the challenge, is actually take 100g/bag packaging and their own 70g/bag of packaging competition, the defeat is not white elephant, but their own money old products.

Reviews

White Elephant's price war, the technical content has three points:

1. White Elephant has opened up a new product packaging and price range, the price war does not affect their own old products;

2. Opponents dare not easily to challenge, opponents if the challenge, is in the "new and old product mutual", damage has not been harmful to others;

3. "Future sales" for the current pricing, that is, after the success of the price war sales to pricing before success. As long as the price war has been won, sales have risen and the cost structure must have changed.

Gome's price war also belongs to this model. In Gome's losses, Mr Huang is still sticking to two things: one is rapid expansion and the other is price wars. Rapid expansion is the use of future sales support to fight price.

The technical content of this price war is that the cost structure is dynamic, and the goal of price war is to change the cost structure through the change of market share.

This price war should be concerned that if the price war on the static cost, then the greater the sales, the more losses. Many enterprises because of static cost calculation, so dare not to play price war.

Price war profit model two: structural price war

Only the price can be compared, there is a price war, to price comparable, must be comparable to products, products can be compared, must be homogeneous products. So, the price war is actually the battle of homogeneous products.

Classic case: Ham sausage Industry

Ham Sausage price war at the beginning, Spring is the first brand, double sinks is the second brand, spring sales than double sinks. At the beginning of the price war, the product structure of both sides was similar. In that era of demand, who has the mind to do product structure? The scale is the first.

After the Asian financial crisis of 1997, the price and quality of all the mainstream products of ham and sausage declined sharply. The initial price declines, the loss is profit. Prices fell to a certain stage and began to suffer losses. How to fight a losing price war?

The practice of spring is not to fight price war, because its brand is worse than double sinks. The double sinks approach is to continue to play the price war, but also the introduction of a high margin of the new product "Wang Wang." This product launch is very difficult, for this reason, almost the overall marketing team, from the deputy to the salesman, the overall turnover, the result is a sharp increase in high-end products accounted for. Double sinks again use "Wang Wang" profit to support ordinary ham and sausage dozen price war, force spring all have to challenge.

Spring was faced with two choices: if not, the market share fell; Spring has initially chosen not to fight, the results of the decline in sales; Finally, a leading industry leader almost disappeared.

Reviews

Kill 1000, self damage 800. This is a lot of people's intuitive understanding of the price war, it is true. Because to "clean up the door" as the goal of the price war, to let opponents out of the market, no "800" courage is not. So, in the "Self loss 800" at the same time how to do not lose the price war? The key is to create profitable products, profit-making products to support the loss of products to fight price war.

In the price war, which products can be remembered? First, high-end products. Because high-end consumers are not sensitive to price, the second is small batch product group. Because the sale is small, does not receive the opponent attention, therefore can enjoy the high margin; third, differentiated products, no comparable.

The more fierce the price war, the more serious "blood loss". In the "blood loss" at the same time, to find the ability to "blood transfusion" space. In the meantime, it is possible to make a profit in the price war while the opponent is defeated.

The technical content of the double sinks to win the price war is: Scale apportionment cost, structure produces profit. Industry growth period, gross margin is very high, the scale is the first place. Industry maturity, "scale advantage" may become "scale burden", that is, the larger the scale, the more losses. The solution is to use the structure to create a price war space.

Price war profit model three: "Competition goods balance Point" type price war

To "clean up the door" as the goal of the price war is more such, more in the late industrial concentration.

Classic case: Color TV industry

Changhong launched too many rounds of price war. The first round, the second round, the target is the market share concentration, quickly become the industry leader. The two rounds of price war, the color TV industry is very high, the so-called price war has only reduced the gross margin, the result is: The Big big (Changhong, etc.), the damn still not dead (small and medium color TV enterprises).

From the start of the third round of price war, prices began to fall below the break-even point price, the scale of the enterprise can be profitable, no size of the enterprise affirmation of losses. Short-term losses can also support, long-term losses or participate in multiple rounds of price war, will be eliminated, so as to achieve industrial concentration.

Reviews

Industry growth period, the price war can enlarge the share, but cannot put the opponent to death. To the maturity of the industry, when the market capacity can not expand, the competition for "stock" will inevitably lead to price war. This price war is usually the result of "cleaning up the Portal", "cleaning up the Portal" must be clear about the opponent's break-even point.

The technical content of this model of price warfare is to find the "last straw" that crushes the opponent. When the opponent is close to break-even point, touch the balance point of the opponent's scale and price, launch a fatal blow, you can "clean up the portal."

There are not many enterprises with this kind of awareness, but many enterprises have inadvertently done this.

Price war profit model four: "breakeven point" type price war

Mode three is about the break-even point of the competition, this model is about its own break-even point. The goal is to open the gap with the opponent.

Classic Case: Grant

From selling "duster" to do microwave ovens, Guangdong has thousands of enterprises, gross margin is very high, all live very moist. After the microwave oven, the first to reduce gross profit, two years later leaped to the industry first. After that, when the size of the grand is leaped to one level, the break-even point price drops a step, and the grant makes a reduction.

There are no clear opponents to the many price cuts, but their goal is clear, is to open up the gap with their opponents. At the same time, let the potential opponents who want to enter the microwave industry cut their minds.

Reviews

This price war is the real king of the war, the real king is no opponent, and its opponents are themselves. Every break-even point as a new starting point, by increasing the scale of price reduction, gradually let the break-even point up, you can Shong.

Price war Profit mode five: "Firewall" type price war

The practice is to play value and price wars at the same time. Ming play Value War, dark play price war.

Classic case:

A famous domestic price war enterprises, the products are divided into four categories, respectively, are concept products, star products, mainstream products, firewall products.

The concept product represents the company image, the technology is advanced, the stability is good, usually adopts "the high price quantity small" policy, even takes "the high price does not have the goods" the policy. Star products have aura, both cash flow, but also high profits, to adopt a "high-priced" policy. Mainstream products are best-selling products, low margin, large sales, take the "big price" policy. The firewall product basically belongs to the loss product, does not do no good, the quantity big double loss, takes "the low price small quantity" the policy.

Reviews

In China to do business, they want to be alone, but may not become opponents of the target. A value-fighting enterprise, if it cannot restrain its opponents, will disrupt the value war by price war.

The technical content of this model is: Ming play value War, dark play price war. Not only the price war, but also the image and profit, not only interfere with opponents, but also let opponents powerless to disturb themselves.

Hualong Company has launched the "six Itchome" is the firewall products. From the product quality and scale inferred that "six itchome" quality is not low, the cost is not low, but the price is very low.

"Six Itchome" target market is Henan province, this is the Chinese instant noodles Enterprise Most concentrated place, is also the competition most intense place, the price war is this market basic characteristic. Although the price is low, but this market has fed a group of small and medium-sized instant noodle enterprises. These enterprises out of Henan, seriously disrupted the market system of Hualong.

Therefore, Hualong launches "six Itchome" the goal is very clear, is uses "six itchome" constructs the market firewall. With "Six Itchome" high-quality ultra-low prices, the number of small and medium-sized instant noodle enterprises into losses. If this goal is achieved, even the "six Itchome" strategic losses are acceptable.

Price war profit model six: dominant business price war

The business structure of some industries can be divided into two pieces: one is the full view of the price war, but not profitable "dominant business"; the other is a "hidden business" that is not paid attention to and can make a profit.

As long as the dominant business, must be the target of opponents, faced with excessive competition, ultimately difficult to profit. Scale and brand are the dominant elements of marketing, so the scale is not economic and brand-free profit is the normal outcome.

However, the dominant business has locked the source for the enterprise, resulting in cash flow, which provides support for the enterprise to engage in the recessive business. Therefore, the dominant business will eventually become a business "decoy business", that is, the real profitable business to provide customers and support business.

Classic case One: McDonald's model

McDonald's is no doubt the world's leading brands, but McDonald's hopes to gain brand profits through the brand premium may be frustrated, because its rivals KFC and Burger King are also well-known brands, especially KFC in the location to follow the strategy, McDonald's open to where, KFC open to where. such as the shadow of KFC to make McDonald's lost the brand premium and brand overflow ability, McDonald's and KFC's price war is often staged.

McDonald's profit model is not the brand overflow, but the recessive profit. McDonald's is 0 shop site experts, as long as McDonald's in a certain 0 stores, will be able to drive the vicinity of the shop rent plate. McDonald's long-term leasing and purchase of location, Low-cost access to the store or property rights, and then through the annual price increase in the form of rent increases, to obtain high profits. Therefore, some experts evaluate McDonald's "essentially entertainment industry, access to the real estate industry."

"Entertainment to attract passenger flow + food industry to generate cash Flow + real Estate profits" is McDonald's recessive business profit model.

Classic Case TWO: Sony PS mode

Sony produces high-performance game consoles, in order to quickly occupy the market, through a loss of price promotion. Sony, for example, loses 37 dollars per PS2.

Since the game loss, rely on what to make money? Sony has created a new model of profitability: selling games at a loss and earning money from the right gold. Sony PS throughout the life cycle, won the support of more than 1400 games. "Third party software" every sale of a Sony game, it is necessary to pay Sony a certain amount of money, the game is about 7 to 8 dollars. If the entitlement is 8 dollars, then, as long as each player buys 5 games, Sony will be able to make money and make up for 37 dollars in game-machine sales losses.

Sony is the first by virtue of PS2 low prices, quickly occupy the market. and users in order to play PS2 more powerful functions, will continue to buy games. The selling of the game, in turn, stimulates the PS2 market share further expands, attracts more "the third party developer" to develop the game which plays better. This creates a virtuous circle of PS2, with Sony and Third-party software developers benefiting.

Sony PS Mode features: through Low-cost sales PS Lock customers and generate cash flow, through the game "right gold" to obtain profits.

Classic case Three: Shi Yuzhu's "Journey" mode

Shi Yuzhu is the new profit model of the game explorer and the rule of subversion. January 2006, the free version of the "Journey" officially on-line operation, the company through the sale of virtual equipment to benefit, Shi Yuzhu to create the FTP (Free-to-play) mode landed.

Prior to the grand-headed traditional online gaming company's revenue model is PTP (pay-to-play), players in the game level depends on the online "consumption" of the length of time, players to get online game time and pay, the company's secret is to find ways to extend the player online time. Players for more than 10 consecutive hours of playing games is commonplace, the community of "addiction" to the criticism of the majority of the students.

By attracting more customers to more online time and earning more revenue, this is a typical scale economy model. When the game is less competitive, this model is effective. However, when rivals expect greater size through price competition, the scale becomes less economical.

The journey of the game is characterized by the distribution of "wages" in the form of attracting more customers more online time, but through the sale of "equipment" to obtain income. Because, the essence of online games is competition, competition depends on skills and equipment to win, players in order to win in the game competition, it is necessary to buy the company a higher level of "equipment", the purchase of equipment will pay. The journey is the way to profit.

"Pay attracts the passenger flow, the equipment obtains the profit" is the journey net swims the recessive business profit pattern.

The profit model of price war VII: Industrial chain-type price war

Product Competition--category competition--industry competition--industrial chain competition, this is the level of competitive forward. Some industries, the single industry has been unable to survive, only the formation of industrial chain to survive.

In an industry to fight price war, other industries to provide support, so that only a single industry can not survive, this is the industrial chain price war.

Classic Case: Meat industry

Spring, double sinks, gold gongs are from the slaughter of meat enterprises, and later all involved in meat processing. At the beginning, because of the high profits of meat processing, spring has gradually withdrawn from slaughter, and double sinks, gold gongs still retained the slaughter, and the industrial chain is further extended. The vertical industrial chain of double sinks includes: agriculture-feed--breed--slaughter--high and low temperature meat products--chain commerce; horizontal industrial chain including packaging, PVDC, medicine, logistics, etc. The industrial chain of gold gong is similar to this.

In the ham and intestines price war, the spring lacks the industrial chain, other industries (beverage, building materials, bioengineering, hotels and so on) cannot provide the support for the ham sausage price war, but the double sinks, the gold Gong's entire industrial chain can the resources centralism to the terminal industry to provide the support.

Reviews

If you only have a single product, participating in a price war will mean that all is affected; If you only have a single industry, a single industry loss means the overall loss of the enterprise. If the formation of the industrial chain, then, any industry price war, can be from the industrial chain to obtain collective support.