Jiang Zezhong on Haidilao's price increase: It is unwise to raise prices now and will hit consumer enthusiasm

2020-04-07 18:03

Jiang Zezhong, professor at Capital University of Economics and Business and researcher at the Research Center for Private Enterprises of the Chinese Academy of Social Sciences

Produced by | Sohu Think Tank

Edit | Hu Meng

In the past few days, enterprises have resumed work and production, and the catering industry, which has been seriously affected by the epidemic, has attracted much attention. Among them, Haidilao, Xibei and other catering enterprises were exposed to increase prices after resuming work. Haidilao PUBLIC RELATIONS responded to a number of media that due to the epidemic and rising costs, the company adjusted the price of some dishes, and the overall price increase was controlled at 6%, and each city implemented differentiated pricing.

"Under the influence of the epidemic, the cost of catering, tourism and other industries is increasing, and the increase in industry costs will inevitably shift to the price field." How to view the current price adjustment behavior of catering enterprises? Jiang Zezhong, a professor at the Capital University of Economics and Business and a researcher at the Research Center for Private Enterprises of the Chinese Academy of Social Sciences, told Sohu Think Tank.

Jiang Zezhong pointed out that the price increase caused by the rise of raw materials is a market law, for example, the price of some fresh products that need long-distance transportation, consume a relatively large amount, and have obvious seasonality will change with seasonal changes.

"On the basis of rising costs such as raw materials, enterprises can appropriately increase prices, and even maintain the original price to win consumer recognition and increase the market scale effect." Jiang Zezhong believes that with the resumption of work of enterprises, market consumption will rebound, and the intensity is very large, which is a good time for enterprises to improve brand awareness and customer loyalty, and price adjustment will obviously damage consumers' consumption enthusiasm and brand recognition. ”

In his view, the rebound of consumption needs to vent, consumers still tend to identify with high quality and low price, and there is great competition between enterprises. In addition, the price adjustment of the catering industry is generally upwards, and it cannot go down after the adjustment, and the price increase will cause consumers to selectively avoid, which in turn will hurt the operating performance of the enterprise.

"Since the establishment of the market economy, price management has been largely delegated to enterprises themselves. Price adjustment forms a law of always upward adjustment, and rarely downward adjustment, unless it is a seasonal product or faces the pressure of expiration. Jiang Zezhong said that many catering enterprises will form a vicious circle of price adjustment, when the enterprise operation is better, the price will be raised upwards, and the price will be changed after everyone does not come to consume or the price will be greatly adjusted, but at this time, the company has lost market share.

"It's not worth the loss." Jiang Zezhong stressed that the epidemic is a force majeure, do not regard it as a regular phenomenon, and it is not wise to adjust prices now. We should remind business operators to expand the scale of operations with the help of consumption rebound as much as possible, thereby diluting costs and increasing profits.

He further said that the price adjustment should be considered in the long run, from the aspects of corporate brand, customer loyalty, market share stability, etc., and strive for the stability and improvement of the operating volume, not simply from the price. "Most bosses also understand, but he may not have a turnover for two or three months under the influence of the epidemic, so it is easy to be anxious."

Jiang Zezhong stressed that enterprise operators must carefully consider the price issue, and the way to improve the profit of a single product is to drink and quench thirst. "Consumers are very sensitive, and slight price increases by enterprises can be accepted, but if the adjustment range is large, consumers will be psychologically resentful, resulting in a decline in the market share of enterprises." Because under the influence of the epidemic, consumers' spending power has also been affected. ”

In addition, Jiang Zezhong said that the market share and brand awareness of large-scale and long-term business operators are more obvious, but most enterprises are not strong enough in this regard, and many catering companies have the idea of making quick money. He believes that the government and industry associations should play a role in letting catering operators have a systematic understanding of this and guiding everyone to pay more attention to continuous profit margins and profit amounts.