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    Home > Coatings News > Paints and Coatings Market > Under the new normal: paint companies to reduce prices

    Under the new normal: paint companies to reduce prices

    • Last Update: 2021-02-14
    • Source: Internet
    • Author: User
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    China Paint Network
    News: Into the new normal environment, in the oil price continued to fall leading to some of the main raw material prices continue to fall under the premise, I learned that some business sales leaders based on the so-called competitive considerations and performance growth needs, actually began to raise the issue of price reduction. As we all know, on the overall macro perspective, although material prices have continued to fall in the past year, but so far the major enterprises in the industry have not issued a price reduction news. So in the current situation, should we cut prices? How much does a price cut really drive sales? How will it affect the subsequent development of the enterprise?
    from an analytical point of view, I think the problem of price reduction is much clearer than the price increase.
    1, support factor analysis
    First, oil prices continue to fall, resulting in a drop in raw material prices, even PetroChina Sinopec have to fall, we
    plasm enterprises
    why not drop; Obvious stimulus effect; third, price reduction can be recognized by dealers and end-customers support, help channels and customer consolidation, especially to enhance channel confidence; fourth, price reduction more reflects the enterprise's market-oriented operating philosophy, so-called closely follow the market, by the market to adjust, the rise should rise, the fall should naturally fall.
    2. Do not support factor analysis
    First, although material prices continue to decline, but the overall operating costs of enterprises in recent years continue to increase, especially labor and tax costs (such as the recent increase in fuel consumption tax projects), coupled with the overall market growth slowdown, weak performance expansion, resulting in low general profit margins; Positive promotion relationship is not obvious; third, in the market downturn, weak sales expansion, enterprises should take a more cautious and sound "dilution of sales, value profits" mode of operation; With the gradual recovery of the global economy, the rise in oil prices is an inevitable trend

    ; Only a major component of finished product pricing, not all, finished product prices can not be with the fluctuations in material prices and rapid response and one-to-one correspondence;
    Thye, on the price reduction analysis of leading enterprises
    First, from the industry level, leading enterprises' price reduction behavior (especially the first to reduce prices) will inevitably be followed up by the industry to a certain extent, so there is a risk that the industry will be caught in the price war development dilemma, which has been verified in the development experience of many industries in China (such as the home appliance industry Changhong's first price reduction).
    from a strategic point of view, price reduction will have a significant impact on the position of enterprises in the industry and future development strategies. For example, positioning in the high-end market enterprises, the first price reduction is likely to have an impact on its high-end positioning of the image of the product spleen, at least gradually blur its original high-end positioning risk; Naturally should try to change with the price of materials, which is naturally relevant, because in line with your positioning strategy of materials, such as your positioning is inclined to downstream finished products or even fast-selling products, then one is your price composition is relatively complex, and the other is that your price strategy should naturally change with consumer demand - constantly new, try to provide added value of products, strengthen brand sentiment, rather than reduce prices.
    is the mainstream products or large-scale price reduction, will not be beneficial to the development and progress of enterprises. The reason is very simple, first, now the market growth slows down, capacity has become saturated, price reduction for sales promotion is extremely limited, price and sales promotion relationship is not obvious; Market input is limited, the added value of products also began to reduce, resulting in only a small manufacturing profits can be caught in a vicious circle of great risk;
    is in fact, the price reduction is not at all beneficial to the channel and customer loyalty. Because the customer's logic is always " even if you take off your underwear, they don't think the price is the lowest". That is, no matter how low you lower the price, customers always think you can also reduce, and they will not receive the price reduction. On the contrary, when we buy high-priced products or branded products, we are more down-to-earth, and pay less attention to prices, even if we think the price is high, but the heart is acceptable, and will convince themselves - the brand is like this, perhaps we now have no money to buy, once we have money, will be determined to buy high-priced brand products. This is the price mentality of the customer (buyer).
    5 is particularly worth reminding that leading enterprises must not have an opportunistic mentality, do not "can't wait" to take the lead in reducing the price of the time difference to build a so-called price advantage, especially in itself located in the middle and high-end enterprises. In fact, this is typical of the artless, the result is doomed to steal chickens can not give up rice. As mentioned earlier, in the current market development stage, no enterprise has absolute price competitive advantage, it is impossible to see price as the main means of competition, the market does not support such a means. So not only does a price cut blur your positioning, but you run the risk of getting yourself into a price war - you can go down with someone else, after all, it's just a matter of time. Even if you go down again, if the main competitors follow suit, then you have to figure out, what are you cutting the price for? And what do you get as a result?
    6 is that even if the market does have the need to reduce prices, it is recommended that leading enterprises do not take the lead in reducing prices, but with price adjustment, promotional activities or increased marketing policy input and other strategic means to deal with, at least to the market first a test, and then according to the specific situation and then make final consideration.
    in short, as a leading enterprise, do not cut prices hasty, less than a last minute in particular can not take the lead in reducing prices. To know that the price is a double-edged sword, cut to others at the same time, why not more heavy cut to their own. In fact, from the development of other industries can also be seen, all the price-cutting enterprises, especially those holding up the price butcher knife, ultimately proved to be unwise, not really excellent enterprises, the outcome is not good. Good companies are high-priced companies, they may be technology-leading, may have a cost advantage, but ultimately to win the brand.
    4, should deal with the price reduction of the three "alternative price reduction
    strategy
    1, price adjustment
    for example, can be considered as follows:
    first, the introduction of price adjustment policies rather than price reduction notice; The rationalization of product structure, for example, helps to reduce the category, form a more cost-effective competitive single product, or contribute to the promotion of new products or high-end products; In fact, some enterprises as early as N years ago in the individual furniture paint category on the use of weekly quotation system, so relatively speaking, its entire price system by the impact of material price changes and pressure will be smaller, and then customers have been used to price adjustment, so psychologically for the rise and fall prices will not feel anything wrong.
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