Huayi price cuts, industry shuffle?

Text / reporter Sun Peng
In the early 1990s, microwave ovens used high profits to induce large and small enterprises at home and abroad to rush to the top. Even factories that produce screwdrivers thought of the microwave oven market. In August 1996, Galanz launched the first comprehensive price cut storm, all products were reduced by 40%, set off the first round of the microwave oven "popular revolution", the first "world war" in the microwave oven field also under the revolutionary push to kick off. In this battle, a large number of "guerrillas" and "three no" small factories were cleared out, and many second- and third-line brands disappeared in the cruel "hand-to-hand combat". The total number of brands has been reduced from a few hundred to a few dozen. Galanz, the provoker of the war, apparently won the war, and the market share rose to 53.2%.
In the days to come, under the leadership of the total cost leadership strategy of “destroying the value of the industry”, Galanz waved the price of the cutting edge and the violent industry shuffled successively. In 2006, the competition in the microwave oven market dropped from five or sixty companies ten years ago to five or six, while the annual production and sales volume of Galanz microwave ovens exceeded 20 million units, occupying China with 70% market share, and also occupying the world. Half of the market, Galanz has undoubtedly become the market hegemon of the peers, but the abuse of the price of the blade has also been sealed by the industry as a "nickname" - "price butcher."
Today's lighting industry, despite the rapid development in recent years, but the entry barrier is still very low, the company is mixed, the products are mixed, and very similar to the earlier home appliance industry, how to promote industry reshuffle, improve access threshold, it seems that A lot of things that want to be a brand company to think about. Since the beginning of this year, raw materials have skyrocketed, labor costs have increased, corporate burdens have increased, and finished lamps have risen in price. However, at this time, some business owners have joked to reporters that if large enterprises join forces at this moment, they will not raise prices but lower prices, which is bound to It can cause the industry to vibrate and make it shuffle in advance, artificially forcing some SMEs to go out.
If jokes are just germination ideas, recently there have been companies trying to: the medium-sized enterprises that have never raised prices, and the Huayi Lighting, the leading company that has lowered the price by 40%. This kind of technique has to remind people of Galanz and his "destroy value" theory, which is known as the "price butcher". So, does the lighting industry need a price butcher? What kind of enterprise can take this responsibility? The price of the knife can give What does the industry bring, and what is the disadvantage? We have to think deeply about it. For this reason, the reporter visited some business owners and industry professionals to listen to their opinions and suggestions.

Stabilizing the price weapon to achieve the dominance status If Galanz uses the "price butcher" to show the dominance, but ignores the added value of the brand, after all, it can not be convincing, but in the lighting industry, Oupu uses the price of the blade to kill a world and successfully shape The brand's "1860 Battle" has become a classic, it is worth learning. In 2003, in addition to the Ou Pu, the ceiling lamp market is also active in the same category of brands such as Liangdi, Selden, Budis, GEG, Huayi, Jihao, etc. Selden’s three anti-small ceiling lamps make Op Troubled. At this time, Op, with the "10W" model 1860 as a breakthrough, started a price campaign. It is understood that the ex-factory price of the 1860 was about 26 yuan, the terminal was sold at nearly 39 yuan, and the monthly shipment was about 5,000. Through the negotiation and mass production of upstream suppliers, OPEC has reduced the manufacturing cost of 1860 as a whole, making the planned retail price of 19.80 yuan possible for long-term execution. As a result, Opp started production and prepared a large amount of inventory. After the national dealer conference in September, nearly 150,000 price cuts were put on the market at 1860, giving the opponent a surprise. On the surface, the relative gross profit of enterprises has declined, but the monthly shipments can reach nearly 200,000, and the peak shipments reach 260,000 units a month. The absolute profit scale has been greatly improved. The perfect dance of this price sharp edge has not only made Opt take more For the rich market profits, the comprehensive promotion has greatly enhanced the network cohesiveness of Opus, increased the popularity of the terminal, and promoted the sales of other products, effectively curbed the competitors, formed a coherent economic benefit, and undoubtedly upgraded to A corporate brand campaign.
The price of the knife can be the most important for the production of the Qingdao scale. A marketing expert familiar with the home appliance industry said that he has to admit that Galanz’s price has made him a “scavenger” in the industry. Today, the entry threshold of microwave ovens is far behind. Considering the scale and strength, they dare not make it easy. These credits should belong to the "price butcher." Can Galanz's excessive dependence on the price butcher knife, unconsciously let the imprint of "cheap goods" deepen its body, so that today's Galanz has a reputation, but lack of reputation, the lack of brand value, which seems to block its further A stumbling block to growth.
In contrast to Galanz's regret, Opt seems to be both fame and fortune, which may have a lot to do with the specific operation methods and intentions. However, through the above two cases, we still found that the price of the butcher must be capable of scale production. It has a certain influence and even has a monopoly position in a certain category. Among these conditions, scale advantage is the key. Galanz used the cheap labor and raw materials at that time, adopted a three-shift work system, and super-large-scale production, which made its product cost advantage an absolute leading position, and ultimately achieved its dominance in the microwave oven field. Huayi, which took the lead in cutting prices, also completed the expansion of a scale before dare to dance the price. According to Guo Dawei, Marketing Director of Huayi Lighting, the national market of Huayi Lighting has been scaled up. The domestic factories have been expanded from 10 workshops in 2006 to 10 workshops with sufficient capacity support. The price adjustment is aimed at guiding the lighting industry. Intention to shuffling the lighting industry, and small enterprises can not achieve scale benefits will face out, so set industry standards, clean up the market, and take the responsibility of forming industry order.
Different price elasticity should be used. However, in addition to the scale production that enterprises must have, there should be many factors to be considered. The implementation standards of the products cannot be ignored. Whether it is Galanz in the field or Op, in the lighting industry, they all have a common feature. That is, the product tends to be qualitative and easy to mass produce. Lighting products try to use the price weapon to clear the industry, take scale production, and seek cost leadership needs to be considered. Industry marketing person Hess believes that the price elasticity of products determines its promotion mode of operation. Qualitative products of lighting applications, such as energy-saving lamps, brackets, commercial photos, etc., must pursue the strategy of scale-winning and cost-leading. To a certain extent, it is necessary. The price butcher "to promote the industry shuffle. And decorative lighting products, more pursuit of differentiation and features to drive profits, the use of this method seems to be quite difficult, product characteristics determine its relatively large profit margins, price elasticity is also very large, sometimes how much profit depends not only on sales Support, such as Rolex watches or world famous paintings, can't pin their profits on sales, and the future direction of lighting is also moving toward high-end and luxury. Therefore, it is not possible to confuse lighting and lighting. The price of the butcher knife depends on the field and cannot be borrowed blindly.
Brand value to improve quality control is the key Galanz due to too frequent use of price butcher knife, so that its brand value appreciation is slow, the sales volume is amazing, the profit is thin, it is hard to imagine, and finally the price increase becomes difficult to implement. The Huayi Lighting announced a price cut across the board, and some even fell by as much as 40%, which is bound to oscillate the industry.
However, some experts said that today's situation has been different. The raw materials and labor costs seem to have set a threshold. Enterprises want to use the price of sharp edges to achieve market layout, and can only rely on intensive production to make the operability difficult. Therefore, the value of the brand must be taken seriously, and it should not be neglected by quality control, which will have a negative impact on the company. It has also been said that the price of the blade is easy to make the industry fall into the dilemma of price wars. If it is careless, it will lead to an overall decline in product quality, which is not conducive to the development of the industry. Hess said that the price weapon can not be used as a tool to change the law of the market. The market economy is still based on the laws of the market. The artificial operation may only be as fast as possible, but the negative effects may not be known.
After the editorial language is in the "up" sound, Huayi price cuts have undoubtedly become the focus of attention in the industry. Huayi may be able to break the trail from this price cut and earn a pot full of pots, but can Huayi wave the price of the knife? To promote the industry reshuffle, we can only wait and see. At the same time, everyone has to be aware that the price weapon is a double-edged sword, which can hurt people and may hurt others. Therefore, before using the price weapon, you must first practice the internal strength, and you must not be impulsive.
Editor: Lu Zuhui Typography: Lai Xinchao refers to: Peng Anjun final review: Yao Xiaohong

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