Shenzhen GK Lighting Co.,Ltd.
LED modules and LED strips lighting expert
Why will high prices eventually beat low prices?
In confrontational competition, high prices are often distracted or even frightened by low prices. Such situations are not uncommon in the LED industry. Lowering prices is a common practice for LED companies to increase market share in the current fierce competition environment. means. But in the end, the low price is always difficult to beat the high price, and even loses completely in the face of the high price. What's the secret? Today, I would like to share with you an article about high and low pricing, and low prices spoiling the situation.
It is normal for high prices to defeat low prices
. A salesman once asked the boss: "There is a small factory in the market, the price is very low, and it is difficult to deal with it. What should I do?" A small factory, but we are a big factory?"
In fact, low prices usually only play the role of "spoiler" in the market. In adversarial competition, the high price is often distracted and even frightened by the low price, but the low price is always difficult to beat the high price in the end, and even loses completely in the face of the high price.
We often find that the worst selling items on the market are usually also the lowest priced items. Unless there is an absolute cost advantage and product structure advantage, low price is no longer a conventional means of competition, but a means of strategic competition. In conventional price competition, low price is often regarded by experienced marketers as the "life-saving straw" for the desperate, and it is often the last straw that breaks the camel's back.
The price level is not a pure pricing issue, but the core issue of marketing. The price and the marketing activities carried out around supporting the price constitute the marketing system. Low price or high price is actually the difference between selling and marketing.
We often see that low prices determine that the core element of marketing can only be price, because low prices cannot support others. The high price determines its rich and varied marketing activities, comprehensive and systematic services, and more added value, which is determined by the policy space generated by the price.
It is the normal state of the market that high prices beat low prices, and it is a case of low prices beating high prices. Of course, the strategic price war in the process of industrial concentration is an exception. Marketing is to sell the price, and only after learning to sell the price can one understand the true meaning of marketing. The public's "common sense" of prices is precisely a misunderstanding from a marketing professional perspective.
No matter what the price is, corresponding marketing activities are required to prove the rationality and legitimacy of the price, and to obtain price recognition (whether it is worth the price). But this is precisely the misunderstanding of many people. What many people understand is that high prices need to be supported by marketing activities, but low prices do not, because low prices themselves are proof.
We often see that "naked price" listings are basically failures. The so-called "bare price" means that the price is in the end. In addition, there is no marketing cost. Products listed at "bare prices" are basically difficult to have an impact on consumers, except that they may have a certain impact on the channel at the beginning of the listing.
Consumers' purchases must be based on their identification with the product. This recognition comes from packaging, price, consumer experience, marketing, brand communication, etc. After the product goes on the market, in addition to the approval of packaging and price, other identification methods require certain marketing support.
There are two concepts of price identification: one is the price itself, that is, the price is high or low, and this identification does not produce purchase behavior; the other is the relationship between price and value, that is, whether the product is worth the price, which is the difference between price and value.
Low price itself only produces the first kind of recognition, not the second kind. The second type of identity is the identity generated after consumption experience and marketing promotion.
Price recognition is not derived from the price itself, but from marketing activities that demonstrate its value. And marketing activities need marketing policy support, this policy does not fall from the sky.
Some people think that the marketing policies of large companies are good because they have more resources, which is a misunderstanding. The initial policy investment is nothing more than an advance of resources, not free use, but to be repaid through reserved price space and future sales.
The correct price thinking is: when a new product is launched, the price should be slightly higher, and then the profit margin is pre-expended for marketing activities, and marketing activities are used to support consumers' recognition of the price. The so-called marketing is the sales price, which roughly means this.
Of course, we cannot deduce from this that the higher the price, the better, but we need to balance the price and marketing expenses. Because the higher the price, the more you need to invest in ensuring price recognition.
Except for those special cases where there are strategic costs and strategically low prices, we can find a basic phenomenon: the price is directly proportional to the marketing ability of the enterprise. Of course, it is difficult for us to speculate whether this is due to the loss of marketing capabilities due to low prices, or whether it is because of low marketing capabilities that we dare not set high prices.
In most cases, there is a mutual causal relationship between price and marketing ability. Because the marketing ability is low, the price has to be set low; because the price is low, the lack of cost support shows that the marketing ability is low.
Although some enterprises have low prices, their initial marketing activities are very large. In the early days, this approach may pay off quickly and has the potential to succeed. Now, however, the market threshold is already very high, and this "short, flat and fast" style of play is no longer effective.
Doing the market requires continuous investment, and it is difficult without long-term policy support. Facing the short-term low prices of competing products, many people lost their temper and were lured into the water. The normal phenomenon in the market is: the one with the low price will come on the stage after you sing, while the one with the high price will not move.
The vitality behind the high price The
market activity is more likely to attract consumers' attention than the price. Low-priced products are often silent, and high-priced products are often active.
In the terminal market, there is a very special phenomenon: the best-selling product is often not the product with the lowest price, nor the product with the highest brand awareness, but the product with the most active market performance.
In the terminal market, there is a phenomenon of "similar brands", that is, the brands that enter the terminal display are basically recognized by the market. Even in the terminal market, there is still the phenomenon of "brand coverage", that is, the commercial brand "covers" the manufacturer's brand, that is to say, as long as the terminal agrees, consumers will basically agree.
In the terminal market, there are a lot of products, and the overall brand recognition is very high. Whoever is active will be more likely to attract consumers' attention. Consumer attention is one of the key factors for consumers to buy.
Under China's realistic business environment, being noticed requires a fee. The manufacturer pays the fee, and the merchant gives you the opportunity to display the terminal. At present, the most commonly used means of expression for terminals are promotions and promotions, which cost money. The various fees charged by terminals are actually the result of manufacturers competing for terminal performance. Manufacturers are willing to spend the money to prove that the terminal performance is effective.
In addition to attracting consumers' attention, terminal activity has another effect that allows consumers to "take advantage". Cheap is different from "taking advantage". When consumers ask "can it be cheaper", don't misunderstand that as long as the price is lower, consumers will buy it.
In fact, the words of consumers convey two meanings: first, they agree with the product and price, and only want to "counter-offer" when they have the intention to buy; second, they hope to "discount" on the basis of this price, and the discount can increase the purchase determination. The meaning of "preferential" expressed by consumers is often misunderstood as "cheap". In fact, preferential is "taking advantage".
Allowing consumers to "take advantage" actually means that companies have two pricing steps: one is explicit pricing, and the price is usually higher; the other is implicit pricing, which lowers the transaction price. This process can give consumers the feeling of "taking advantage".
If there is only one pricing step, consumers will not have the feeling of "taking advantage". Various sales promotions and promotional activities carried out at the terminal, regardless of the cover-up of the theme of the activity, are actually aimed at making consumers feel "taking advantage". Those themes are just for the sake of "making a name for yourself".
High prices push
new products into the market, and prices are a means of cognition. After the product has established popularity, the price is the means of competition.
There are not many new products that receive such treatment, and most of them are launched in obscurity. When new products are launched, consumers lack consumption experience, so why should they judge the products? You must know that if consumers cannot make judgments, it is difficult for consumers to make purchasing decisions.
As the old Chinese saying goes, "You get what you pay for," not "You get what you pay for." For those who have no consumption experience, price is a label of quality, not the other way around.
The prices of new products launched are often not used for sales, but for product positioning. The information conveyed by the high price is itself a kind of positioning.
Of course, high prices may not directly give consumers a high-quality feeling, but low prices can easily give consumers a low-quality impression.
For distributors, the most concerned thing is not so much the price, but the price space, that is, the profit.
In actual sales, we see that the most sensitive to prices are not consumers, but distributors and salesmen. Channel providers are not so much sensitive to prices as they are sensitive to profits. When a distributor asks for a lower price, he actually does not intend to sell it at a lower price, but to obtain a higher gross profit.
Some distributors with relatively strong operational capabilities may even do some marketing and promotion activities when they get low-priced products and sell them at high prices. Channel vendors with poor marketing capabilities, if they get low-priced products and sell them at a reasonable price, they will usually ask the manufacturer for policies later.
In channel sales, manufacturers not only need to formulate ex-factory prices, but also formulate a price system. The price system is the gross profit space. If the price is too low, it means that the gross profit space of the channel is small; if the gross profit space is small, it means that the enthusiasm of channel recommendation is small. If it is a well-known product, there may be people who buy it without recommendation; if it is an unknown product, the lack of gross profit space means that the opportunity to be recommended is lost.
The best-selling of non-famous products, in addition to the promotion of manufacturers, the most important thing is the active recommendation of channels. If it cannot become the "first-promoted product" of channel dealers, it is very unlikely that non-famous products will sell well.
Drive high and go low, or drive low and go high?
There is a basic law of marketing: high-priced listing, first difficult and then easy; low-priced listing, first easy and then difficult.
Price-sensitive consumers are easily tempted by low prices. Since you can be tempted by your low price, it is easy to be tempted by other low prices. Therefore, the loyalty of price-sensitive consumers is not high. On the contrary, consumers who are not sensitive to price are difficult to be seduced, but once they are impressed, they are very loyal. Therefore, it is difficult to accumulate low-priced consumers, mainly because of low loyalty. High-priced consumers can be accumulated and can be consumed repeatedly.
The growth of the market lies in the continuous accumulation of valuable consumer groups.
In an ultra-competitive environment, only a few brands, such as luxury goods, have the ability to raise prices. In most cases, the price trend is "open high and go low". There are a few people who expect to open the market at a low price and then raise the price. This is an ideal idea, but most of them will not work.
Prices go high and go low, which is actually in line with the principles of consumer psychology. According to the law of consumption, only about 5% of people are early consumers, they are not sensitive to prices, only sensitive to new things.
The price itself is not positioning, but the price determines the consumer group, and the consumer group determines the positioning, so the price itself also has the meaning of positioning.
Now IT products basically adopt the strategy of "open high and go low" when they go on the market. The price "open high" is to select consumers and let these consumers who usually screen by price to position the product.
Price positioning is to form a certain symbol. If this kind of symbol is sought after by the public, then, in the process of "lower prices", more consumers can be mobilized to buy, especially those consumers who do not have purchasing power when prices "higher".
The product positioning is "high open" with price, and the consumer base is expanded with "low price". This is the essence of the operation of "opening high and moving low".
Shenzhen Guangke Lighting Co., Ltd. is mainly engaged in LED modules, LED flexible light strips, and LED rigid light strips. The products serve customers in the field of global advertising production. Your needs are my choice.
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