Is Markdown Promotion Good Or Bad?

Price reduction seems to be the most common method used by many manufacturers in promoting sales. It has various forms: direct price reduction, discount, purchase, return, and bundled sales.

Moreover, in the view of most people, price reduction is usually the best.

So what is the truth? Because no matter what kind of price reduction is, it is a shock to the existing market, which may cause market turbulence. Next, I will explain two positive and negative cases.

Vatti uses price cuts to promote sales and profits.

In 2003, SARS raged, and the normal business activities of many manufacturers and businesses were severely hit. However, in this year, Vatti went against the trend and launched a bold move to buy European style hood and send brand-name air conditioners.

Why is this? Because in the kitchen appliances at that time, the European hood is a luxury product, thousands of dollars, and the profit space is even more astonishing, but many brands are always reluctant to make a large percentage of buying and selling activities for promotional means.

At that time, Vatti hood was awarded the honor of national exemption from inspection. However, as a rising star of smoking machine manufacturers, its brand was far less famous than that of FOTILE and bosses. In order to enhance its brand image and open up the outlet of Vatti hood, it broke the current status of the brand of European style hood industry from Jiangsu and Zhejiang brands. Vatti made the promotion measures that shocked the industry: buy Vatti European style hood, and the famous brand air conditioner carries it home.

The move broke the myth that the price of European style cigarette machine was unattainable at one stroke, and pulled the price of the European range hood back to the normal track.

The Vatti hood also made a big hit and sales soars.

Vatti's hood sales promotion was successful, that is, he first grasped the psychology of consumers - European hood is luxury, we can not afford it.

The purchase of Vatti has fundamentally broken the mindset and allowed the European hood to walk into the homes of ordinary people.

Secondly, the European style hood is monopolized by the army of Jiangsu and Zhejiang. At that time, as a "second-line" brand, Vatti's oil fume exhauster must have broken the monopoly, and breaking the monopoly weapon is to reduce prices, so that prices can be rationally regressed.

Vatti's European hood has made a new world in the industry of strong people.

Canbo uses price cuts to promote fame and gain.

Canbo, as the leader of domestic disinfection cabinet, has done two very frustrating things in the industry in 2001. He flagrantly offered the sword of price reduction, and launched the two activities of "red riots" and "Autumn Harvest Uprising" enough to disturb the entire disinfection cabinet industry.

In June 2001, Canbo launched the "red storm". In September 2001, it launched the "Autumn Harvest Uprising", reducing the price of the main selling products across the board, the largest decline of 33%.

With Canbo's own explanation, it is to purge the market, block the miscellaneous cards, and improve the competition level of the disinfection cabinet industry.

However, we need to know that disinfection cabinet, as a country's few household electrical appliances with independent intellectual property rights, has been developing very slowly for ten years in the development of people's traditional living habits and geographical environment. So far, only about 2 billion of the market capacity has been developed.

Admittedly, the prospect of sterilizing cabinet as a new kitchen appliance can be said to be very broad. Therefore, it has attracted many enterprises to enter. There are also many small cottage factories, which have a negative impact on the healthy development of the industry.

But we need to know that this is the process that any industry must grow.

And when Canbo is not yet ripe (consumers do not recognize this product, think the disinfector is troublesome in the kitchen), it raises the price war, the big knife, in the elimination of a number of small cottage factories (at the same time, there are about more than 100 Miscellaneous enterprises closed or converted), also reduces the profits of the entire industry.

As a result, Canbo's two activities have not been widely recognized by consumers, and sales have not been greatly improved, which has also led to an abuse in the industry.

The sale price of Canbo has made the development of sterilizing cabinet industry worse and worse, so far, the market capacity is still only about 2 billion.

As the boss of disinfection cabinet industry, Canbo has less than 14% market share.

Analysis: price reduction is usually a challenger's behavior

Facts show that price reduction is not a panacea. If you use it well, you will achieve your sales goal. If you use it, you may lose the result of losing money.

Vatti was successful in using price promotions, but Canbo failed to use price promotions.

Why is that? This is mainly from the different position of the two industries.

Price promotions are mainly used to attack competitors, expand sales and suppress sales of competitors.

In the perspective of the company's operation strategy, it is to improve its voice in the industry.

Therefore, it can also be seen as a challenge to industry leaders.

As a rising star in the field of European range hood, Vatti has a very clear purpose in reducing the price of its range hood. It is to challenge the industry leading position of the brand of hood in Jiangsu and Zhejiang Province, and to make an article around the price of European style smoking machine, so that competitors will be caught off guard.

And Canbo is the big brother of the sterilizer. What is the purpose of his sales promotion? Is it against competitors? (he is already the industry leader) is to purge the market?

As a challenger, Vatti's price reduction strategy has attracted the attention of the industry giants, breaking the market structure, and he succeeded.

Canbo is the leader to do the challenger, because his first price cut led to other enterprises in the industry can only deal with a larger price reduction, so you come to me, the industry will generally reduce profits, no more profits to support the development of new technologies and products. In the past, the accumulation of the need for rapid development of the disinfection cabinet industry is bound to be affected, thus hindering the stable and healthy development of the industry.

Therefore, this short-sighted behavior has been widely criticized in the industry.

Because the disinfection cabinet industry is still a new field. If you reduce the price, consumers will not necessarily buy it, but it will destroy its consumption. Script src=>