--- title: "Price Can Compete, but Competition Should Not Be Only on Price" description: "As raw material prices soar, companies find it increasingly difficult to sustain themselves by cutting costs alone. How should they raise prices? To gain market share, are they willing to sell at a loss, and can price cuts achieve the desired results? Price competition only has positive effects when based on providing customer value." author: "New Distribution" publisher: "New Distribution" email: "zhaobo258@gmail.com" telephone: "+8615854817671" published: "2014-07-03" language: "en" canonical: "https://xinjignxiao.com/en/articles/price-can-compete-but-competition-should-not-be-only-on-price-9a1010d1/" markdown: "https://xinjignxiao.com/en/articles/price-can-compete-but-competition-should-not-be-only-on-price-9a1010d1.md" original_source: "https://mp.weixin.qq.com/s/wYTEfWgGOw8VYEl5jAO9SQ" translation: "https://xinjignxiao.com/zh/articles/%E4%BB%B7%E6%A0%BC%E5%8F%AF%E4%BB%A5%E7%AB%9E%E4%BA%89-%E4%BD%86%E7%AB%9E%E4%BA%89%E7%9A%84%E4%B8%8D%E8%83%BD%E5%8F%AA%E6%98%AF%E4%BB%B7%E6%A0%BC-9a1010d1.md" attribution: "New Distribution — https://xinjignxiao.com/en/articles/price-can-compete-but-competition-should-not-be-only-on-price-9a1010d1/" usage_policy: "https://xinjignxiao.com/ai-policy.txt" --- # Price Can Compete, but Competition Should Not Be Only on Price > As raw material prices soar, companies find it increasingly difficult to sustain themselves by cutting costs alone. How should they raise prices? To gain market share, are they willing to sell at a loss, and can price cuts achieve the desired results? Price competition only has positive effects when based on providing customer value. **Warm Tip: Click the blue text above “FMCG Distributor Professional Consulting” to learn more about marketing and distributor internal management.** Raw material prices are soaring, and companies are finding it increasingly difficult to sustain themselves by merely cutting expenses. How should they raise prices? To seize market share, are they willing to sell at a loss, and can price cuts achieve the expected results? **Price competition only yields positive effects when based on providing customer value.** Customer value can be divided into upward and downward types. Upward value includes saving time, higher efficiency, fresh taste, enjoyable experience, and greater safety and reliability. Downward value refers to lower prices, simple packaging, bulk purchases, and reduced services. Wyeth奶粉 emphasizes the taste closest to breast milk and easier acceptance by children, while most Chinese dairy products emphasize price competitiveness. What are the results? After years of hesitation, Southern Black Sesame finally found a breakthrough in value by taking its black sesame paste out of bags and putting it into milk-tea-like “love cups,” and also innovatively launched canned black sesame drinks. The fashionable and convenient value immediately won over young consumers. When products are largely similar, and what you buy for 5 yuan versus 6 yuan is almost no different, price becomes the decisive factor. This is the fundamental reason why countless companies cannot escape the quagmire of price wars. **Three Levels of Customer Value** Only by clarifying where customer value lies can innovation and upgrading be targeted. Food companies provide customer value at three levels. First, the value of basic product attributes, namely safety and good taste. This goes without saying but must be highly satisfied and cannot be ignored. Food must be safe and tasty; this is its most basic attribute value. It is like air—extremely important but easily overlooked by marketers. COFCO's Wugu Daochang treated non-fried as a magic weapon, thinking that nutritious and healthy food would surely be liked by consumers. But what happened? No matter how much effort COFCO put into promotion, if it didn't taste good, consumers wouldn't buy it. Wahaha's Pishuang and Feichang Cola, blindly mixed without regard for dietary basics, after the novelty wore off—who would pay to suffer through bad-tasting drinks? This is also why some seemingly ordinary staple products still survive, while many novel innovative products come and go quickly. Look at the small peanut brand “Huang Fei Hong,” which rarely advertises but has risen rapidly. The value of product attributes still deserves more effort from companies! Second, segment and upgrade the core value of the product, that is, meet customers' segmented and upgraded needs in nutrition and function. Solving the problem of getting heaty (上火) made Wang Laoji successful; quenching thirst and beautifying skin made Xian Chengduo successful; allowing occasional overexertion made Red Bull successful. They created new categories and opened new markets. Valuable functional needs must be clear, not vague; they must be unmet, not already solved. Lingpa thought it solved the “stress” problem, but in fact, stress is intangible; “sleepy and tired” is the real problem, and the solution is Red Bull. Huiyuan's “aseptic cold filling” is even more confusing; “freshness” is the real direction, and freshly squeezed juice is truly fresh, not “aseptic cold filling.” Food companies should pay attention to observing, mining, and seizing this opportunity for demand upgrading. When a market matures, consumer demand begins to stratify by grade. In every ordinary consumer product category, there is room for one or two high-end brands to grow. Just like Telunsu and Jindian for ordinary milk, Deqingyuan for eggs, Zespri for kiwifruit, and Jingqishen for ordinary pork. Third, add value to the product by being more considerate and convenient. When the product itself is no different, value beyond the product becomes especially important. China's social structure and lifestyle are changing rapidly, and the pace of life is accelerating. Apart from eating big meals and enjoying the fun of cooking, people are unwilling to spend time on unnecessary food preparation. Therefore, the demand for convenience in food and beverages is growing, creating a huge and rapidly expanding market. UK's Lipton alone has sales revenue equivalent to that of 70,000 Chinese tea companies, and its products sell worldwide. The main gap is first in the product: their tea crystals are fast-moving consumer goods—just add hot water, and the tea appears instantly, clear and consistent in quality. Traditional Chinese tea, in contrast, is all slow-moving. Connecting to this demand is simple: turn slow-moving food and beverages into fast-moving ones! The specific methods are packaging, small-portion repackaging, and changing consumption scenarios! Laoganma chili sauce was originally made fresh by Grandma Tao Huabi in her small shop. Once bottled, it sold 2.5 billion yuan a year. Before Xiang Piao Piao, milk tea was sold at street-side shops; once put into paper cups, sales soared, creating a market worth tens of billions. Many regional specialties and snacks have unique and appealing flavors with low consumer awareness barriers. As long as they are industrially processed, preserved, and packaged so they can be opened and eaten or drunk while retaining the original taste, they can create large markets and expand from regional to national. By clarifying and meeting customers' upward value, companies can find the leverage point for innovation and upgrading. Products that originate from customer value and exceed customer expectations can firmly attract consumers. With solid consumer loyalty, timely price wars become a competitive weapon. If companies stay away from pure price competition, survival and development will certainly not be difficult. -------------------------------------- **Like this article? Feel free to click the top right corner to share it to your Moments.** About us: WeChat ID: 快销品经销商专业咨询管理 Account intro: 20 years of FMCG distributor operation and management experience, professionally targeting distributor internal affairs. 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