58 innovative plans for marketing

Chapter 12 Price Planning (2)
3. Thinking enlightenment and answering ideas: With the continuous improvement of brand awareness and reputation, enterprises can raise prices in a timely manner. However, in the early stage of price increases, it is recommended to give some affordable gifts to consumers along with product sales, in order to stabilize prices. Climbing plays a certain bedding role.At the same time, enterprises must understand that consumers not only have visual needs for product prices, but also psychological needs.In fact, a dime is really nothing to consumers.But from the psychological point of view of consumers, 1 yuan is a product like 4.9 yuan, which is one level cheaper than 4 yuan!Therefore, product pricing should also consider the psychological feelings of consumers in many ways.

Classic look back
In the late 20s, an unprecedented price reduction war took place in the Chinese watch market, which left a useful enlightenment to the general public.

In the spring of 1988, the National Department Store Watch Order Fair was held in Jinan, Shandong.At that time, a large number of mechanical watches were unsalable and backlogged in the national market. The price was cut three times in a row, and the sales were still not improving.Experts estimate that the shrinking watch market is a foregone conclusion.Therefore, many watch manufacturers worry that this order will make the watch "bloodletting" sell off.Since Shanghai is the big brother of the national watch industry, representatives of manufacturers from all over the country are staring at Shanghai manufacturers, asking whether Shanghai manufacturers will cut prices.The answer I got was: "No drop, no drop. Ala Shanghai Watch's price reduction requires the approval of the municipal party committee. Don't worry." When everyone heard that Shanghai would not drop the price, they were all relieved, and manufacturers from all walks of life posted their old prices. .

The order meeting was held for two days, and various merchants walked around at the meeting, just looking at samples and asking prices, but they didn't place an order, and the manufacturers were always worried.But everyone was not finished worrying. Early the next morning, they were confused by a piece of news: all Shanghai watches were cut in price by more than 30%, and some Shanghai watches were cut in half.Hey guys, 30%!Who can afford it!The sales section chiefs and directors of various manufacturers called back to the factory to ask for instructions.The factory manager didn't dare to make a decision, and held meetings to study and asked for instructions and reports.After researching and asking for instructions, another two or three days passed, time was running out, and the Shanghainese had already finished their business.Various manufacturers called it "miserable" one after another, blaming the Shanghai manufacturers for not being big enough, but the defeat has been irreversible.

After the order meeting, all the manufacturers felt that the watch business was difficult to do, and they all refused to admit defeat and sought countermeasures one after another.Manufacturers in Qingdao believe that it is not the right time to follow the price cuts at this time, because customers will think that cheap products are not good.The think tank of the factory made a calculation: the original price of each "Anchor" brand watch produced in Qingdao is 80 yuan. If the price is reduced, a watch can only earn 1 to 2 yuan at most.Even so, it is not easy to sell more than 100 million watches.If there is no drop, you can earn about 30 yuan per watch, and if you sell 6 to 7 watches, you can basically get back the profit of 100 million watches.The Qingdao manufacturer chose the latter and deliberately advertised on TV that the price would not be reduced, and the business effect was really good.However, many other manufacturers have followed in the footsteps of Shanghai manufacturers and ended up losing money.For example, Chongqing Watch Company lost more than 600 million yuan in one year.

It can be seen from the above case that the company's product price reduction is caused by many factors.However, the price cut should choose the right time.

Skillful touch
The product price reduction of an enterprise means that the enterprise lowers the price of the original product in order to adapt to changes in the market environment and internal conditions.The reasons for the price reduction of products are more complicated, including market factors, internal factors of manufacturers, and other social factors.Generally there are the following situations:
The production capacity of the enterprise is excessive, so the enterprise needs to expand sales, but the enterprise cannot expand sales through product improvement and sales enhancement.In this case, it is necessary to consider price reduction; or under the strong competitive pressure, the market share of the enterprise has declined, forcing the enterprise to lower prices to maintain and expand the market share; or the cost of the enterprise is lower than that of competitors. Control the market by cutting prices; or hope to increase market share by cutting prices, thereby expanding production and sales.

If other competing firms lower their prices, the firm has no choice but to lower their prices accordingly, especially for products that are not very different from competitors' products.

If the demand curve is elastic, it means that a decrease in price can cause a large increase in quantity demanded.In this case, price cuts can expand sales and increase revenue.

In a deflationary economy, as the value of the currency rises and the overall price level falls, the prices of the firm's products should also fall because the prices of competing products are also falling.

thinking innovation
The price reduction of an enterprise's products is a major event for the enterprise, which must be treated with caution, otherwise it will bring adverse effects to the enterprise.Treating with caution should first be manifested in the awareness and understanding of customer reactions.Customers may respond to a company’s product price reduction in the following ways: there will be new products to replace the original products; there are problems with the product itself, and the sales are not good; the company has financial difficulties and it is difficult to continue operating; the price will fall again, etc. Buy again; the product has quality problems, etc.Under normal circumstances, consumers have a negative rather than a positive attitude toward manufacturers' price cuts.Competitors may also use your price cuts to launch a large-scale adverse publicity campaign.Therefore, product price cuts should be particularly cautious.

Practical points
Even if the products of an enterprise meet the conditions that must be reduced in price, the ways in which enterprises choose to reduce prices will be different due to the different status, environment, and reasons for the price reduction of different enterprise products.

1. In the case of the same price, the manufacturer increases the transportation expenses, implements door-to-door delivery, or free door-to-door, or free installation, commissioning, maintenance, etc.These costs should have been deducted from the price, so the manufacturer has actually lowered the price of the product.

2. The price of the product remains unchanged, but when you buy this product, you will be given a free shopping coupon or other items, such as toys, utensils, handicrafts and other gifts.The expenditure on giving away items should also be compensated from the price of the commodity, and the enterprise has actually reduced the price of the commodity.

3. Under the condition that the price remains unchanged, the product quality of the enterprise improves, the performance improves, and the function increases.In fact, the company also lowered the price of the product itself.

4. Increase the proportion of various discounts.Enterprises often adopt various discount or rebate strategies in product price reduction strategies, such as cash discounts, commercial discounts, and quantity discounts.

Scene reconstruction
1. Scenarios
As the leader in the domestic microwave oven industry, Galanz is known for its rigid marketing strategy - price cuts.Over the past few years, Galanz has successively lowered product prices several times. While significantly reducing the price of microwave ovens, it has also increased its market share.

Galanz has always believed that "price is the most advanced means of competition" to ensure its leading cost advantage. The goal of its price war is very clear, which is to eliminate stragglers.Whenever its scale rises to a higher level, Galanz will lower its price once. When its production scale reaches 125 million units, it will immediately set the ex-factory price below the cost price of an enterprise with a scale of 80 units; , it adjusted the ex-factory price below the cost line of an enterprise with a scale of 400 million units; below the cost line.The price reduction of Galanz’s products made the “cost barrier” of the microwave oven industry stand in front of the “technical barrier”, and made many home appliance companies with an annual output of only tens of thousands or hundreds of thousands of units lose interest in the “microwave oven business”. Even Haier, A large group like Royalstar can only lose badly in front of it. In the first half of 200, Galanz used a new round of price reduction strategy to further consolidate its "monopoly oligopoly" position in the industry.

Question: Why does Galanz cut prices?

2. Role simulation
Assuming that you are the boss of a dairy product company, when your own sales shrink sharply in the face of price cuts and dumping by competitors, do you follow the price cuts, or use other methods to expand sales?

3. Thinking Enlightenment
If a company's brand-name products have to cut prices due to the situation, in relation to the content of this section, which aspect do you think can be emphasized in the strategy?

4. Physical training games
Props: some paper, some pens.

Number of participants: 18 people.

Method: Divide 18 people into 3 groups, namely Group A, Group B and Group C, with 6 people in each group.Set up a specific scene, and 3 groups will conduct a product price reduction demonstration on a specified product.

Rules: The time is 30 minutes. Within the specified time, Group A plans an explicit price drop strategy for the product—direct price reduction, and then no further drop; Group B plans a dark drop strategy for the product—through other methods, curve price reduction; C The group plans a gradient price reduction strategy for commodities - price reduction by time period.After the game is completed, everyone discusses the advantages and disadvantages of various plans, and judges the most reasonable one.

Purpose: Through the game, cultivate the ability and skills of gamers to plan product price reduction.

5. Improve plan
Reference answer

1. Scenario case: In order to ensure its leading position in cost and market share, Galanz constantly uses price reduction strategies.

2. Role simulation answer ideas: choose other ways to expand sales.

3. Thinking enlightenment answer ideas: price reduction can be secretly reduced.Keeping the original price unchanged is in fact maintaining the dignity of one’s own brand, that is, keeping one’s own sales position. However, in order to expand market share and compete with competitors, if the price must be lowered, it can adopt a secret drop, such as implementing a coupon system. , Refund part of the payment for goods, give gifts in kind, appear as new products, etc.

(End of this chapter)