Entrepreneurial profit model-seven product Pyramid Model

Entrepreneurial profit model-seven product Pyramid Model

Mode security index:★★★★☆

Sustained profit index:★★★★☆

Innovation Capability Index:★★★☆

Key note: in order to meet different customers' different preferences on Product Style, color, and other aspects, as well as differentiated factors in personal income, the customer base and market ownership can be maximized, some enterprises continuously launch products of high, medium, and low grades to form a product pyramid. At the bottom of the tower, they are low-price and large-volume products, earning profits through small profits; at the top of the tower is a high-price, small-batch product that relies on excellence to obtain excess profits.

A street in Nanjing has seen several teddy bear stores in the past year. Although the capacity of the Chinese market is large for the single product of teddy bear, the market capacity of a city is limited, the competition among these stores soon became fierce.

The reason for the emergence of so many teddy bear stores is that, since the 1990s S, Hong Kong and Taiwan have quickly swept through a collection of teddy bears from Europe and America. Soon, a teddy bear theme park and a teddy bear museum were established in Japan, South Korea and other places, and this kind of love for teddy bears quickly warmed up. As the production orders of teddy bears are largely sent to cheaper production in China, Chinese consumers are also concerned about teddy bears.

A teddy bear is a special product. Like a Barbie, it can be designed into different shapes. In addition, the market price varies greatly with the designs of different manufacturers and brands. In addition, each year, three international awards specifically designed for the latest Teddy Bear gave birth to many classic collections and inspired more people from around the world. As a result, the price of teddy bear has soared. Goods that are produced in China at an ex-factory price of less than 30 yuan can be sold at $60 or more in the international market. Such a large profit margin will certainly not be ignored by Chinese businessmen.

However, when a number of teddy bear stores gathered together, the newly developed teddy bear market in China became saturated due to limited space, and the days of several stores became increasingly difficult. Shop owners with the largest number of teddy bears and the largest inventory began to look for new profit models to get rid of the current situation. After a long investigation, he found that most of the consumers who buy teddy bears are high-paying income class over the age of 20, mainly focusing on middle-and high-grade Teddy bears. Every time the new model comes out, he will buy it even if the price is not asked. This group also occasionally buys low-and mid-size teddy bears, but most of them are for children or small gifts for ordinary friends. So they will bargain for low-and mid-sized teddy bears. At the same time, many people who buy low-end teddy bears will begin to want to choose better and more distinctive products as the number of teddy bears increases.

After finding this feature, the shopkeeper decided to change the sales method. Because the vast majority of teddy bears sold in the Chinese market are processed by manufacturers after the export orders are completed, the remaining small batch of tailstock, so although there are many styles, but the number is very limited. Usually there are dozens of items in this package, and others cannot own the same product. Therefore, the store owner re-chooses the teddy bear in the store, selects a large number of tail products, and some middle and low-end styles in other stores directly sell in large quantities at the price to attract popularity and effective sales, at the same time, the funds in the store are moved. The teddy bears that are provided only by him increase their prices accordingly. In addition, he used to look for new sources of goods in the area of Jiangsu, Zhejiang, and Guangzhou every month. Now he wants to get the latest style from the manufacturer almost once a week. In less than a month, the store's business began to improve.

His behavior immediately disrupted several other stores that run similar products and had to compete for prices. Because the shopkeeper has a new style of teddy bear on shelves every week, attracting a large number of teddy bear collectors, many manufacturers also take the initiative to contact him to provide him with an exclusive supply. In order to promote his products more widely, he found someone to create a website to update the new teddy bear at any time, so that more people began to pay attention to his store.

As the business gradually improves, the shopkeepers have ample funds. As a result, he once again took a bold move to purchase a batch of mid-range teddy bears with a price of more than 150 yuan. In addition, he contacted foreign trade companies, A group of teddy bears with a unit price of more than a thousand yuan were made from the treasure.

As a result, his store began to form a tiered architecture of products, forming a product pyramid. The quality and value of the mid-to-high-grade teddy bear are both affordable and affordable, so that enthusiasts of different levels of teddy bear are beginning to pay attention to this store. Even when someone passes by after work every day, they have to come in. Soon other shops were defeated, and the rent transfer and group were closed.

The shopkeeper did not think that his action beat his opponent and made him more profits.

In fact, the shopkeeper did not realize that he was using the product pyramid, the most common strategy adopted by some sellers in the face of full competition. The reason why he can win in the competition of several companies is that he uses the effective sales of low-end teddy bears to establish a firewall, making other shopkeepers unable to compete with it in terms of price. However, in the product Pyramid Model, the biggest source of profit is medium and high-end products. That is to say, low-end products occupy the market at a low price, attracting popularity, and earning profits from mid-range products and high-end products. If you only set up a firewall at the lower layer, but do not build a profit source at the upper layer, it will be difficult for enterprises to compete continuously.

The perfect and classic product Pyramid Model is Martel, an American company. There are also many buyers of Barbie dolls in China who complain that purchasing only one Barbie doll does not cost much, but if you want to follow the instructions on packaging, if you buy all the accessories of Barbie, you have to spend several times more than buying a Barbie doll. Even a small makeup box of Barbie is more expensive than Barbie. Mattel is a famous Barbie manufacturer. In the decades after the company launched Barbie, they have to face a variety of counterfeits and the impact of a wave of low-price products. We often encounter an embarrassing situation. We just launched a $20-30 Barbie doll, and the imitators immediately made $15 counterfeits. Mattel's Barbie market was facing a crisis. In order to completely reverse this passive situation, Martel has studied a solution to build a product firewall. The company launched an unprecedented $10 Barbie doll. The price is almost zero. However, after the $10 Barbie doll entered the market, it immediately attracted the attention of all American girls and moved them into various Barbie counters set up by Martel. This action is clearly fatal to counterfeits, And the counterfeits on the market will soon disappear. At the same time, Mattel has also received news from counters across the country. At the beginning, girls who only bought $10 Barbie will continue to purchase other auxiliary toys and other types of toys, this benefits Martel from these auxiliary devices and toys.

However, this is not the most classic use of the product Pyramid Model By Martel. In addition to frequent news, Martel also began to look for other profitable products. Through hard work, we can see a market opportunity for a Barbie Doll worth-USD. The target customers of high-price Barbie dolls are not the girls but the mothers of little girls. These mothers grew up playing with Bobbi 20 or 30 years ago and remember them with great pleasure. Now they all have their own money. These mothers will buy themselves a well-designed Barbie-Excellent craftsmanship and unique design, arousing memories of the past. This Barbie is not just a toy, but a collection, just like a porcelain teapot or a precious stamp. Fans are willing to purchase it at a high price. This not only brings a great sense of satisfaction to the customer, but also brings great profits to Martel.

If you follow this idea, you will find that the product Pyramid Model is not just a great idea of a toy company, it can even become a classic model for many entrepreneurs who want to get rid of the predicament from vicious price competition.

However, there must be a prerequisite for the use of this model, that is, to use it in a systematic product or field, and it must be closely linked with the customer's market positioning, in addition, customers of high, medium, and low-grade products must have certain contact factors. For example, users who buy high-end teddy bears usually choose to buy some low-end products as gifts between friends. For example, they want to buy their daughter a mother with a $10 Barbie doll, in general, you will also buy yourself a Barbie Doll worth-USD as a reward for yourself.

The key is to build a pyramid not just a simple list of products at different prices. A real pyramid is a system in which the production and sales of low-price products will win the attention of the market and consumers. For enterprises with comprehensive product lines, you do not have to expect your competitors to snatch your market share at lower prices than you do.

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