Hello, I'm Jinsixi.
Recently in the study of the book "Super Symbol is Super Creative", I have a new understanding of the word "competition", if you are also in business, or an entrepreneur, I hope that the next content will bring you some inspiration.
Competition is an inevitable key link in commercial transactions, and the results of competition directly determine the life and death of an enterprise.
In the competition, the most commonly used is the low-price strategy, that is, price competition. Because it is simple and rude and effective, it has always been highly sought after by everyone.
But we will find that some people play price competition and end up making a lot of money, while some people end up in a chicken feather. Why?
First, all competition is a competition of costs
Drucker said: The pursuit of profit maximization by enterprises is the biggest misunderstanding of enterprises, and enterprises are pursuing profit minimization!
The essence of price competition is how to starve competitors to death with minimal profits. When competitors are starved to death, they can form a market monopoly. Once such an oligarchic situation is formed, even if it is also traded at an ultra-low single profit, from the perspective of time, it is still a real profit maximization.
The minimum profit price here must be the cost of being close to the opponent, or even below its cost, but you still have a small part of the profit in your hands.
For example, we are all selling mobile phones, the same model, I can sell 5999 can earn 100 yuan, and you sell 5999 but lose 100; my cost is 5899, and your cost is 6099, the same market environment, I can survive with a very small profit can directly starve you to death.
Wasn't gome in this way the cost advantage of that year for traditional retailers? And now JD.com has always used the same gameplay to form its own cost advantage.
Second, your cost continues to decrease, and the entry cost of competitors continues to be high
Coke's recipe is no secret, but still no one can shake Coca-Cola's supremacy. Why has Coca-Cola never raised its price for 20 years and has been selling for 3 yuan?
After more than 100 years of operation, Coca-Cola has controlled the production cost low enough, and the price of 3 yuan is not a lot of profit for him, but if a new opponent enters, it is difficult to survive at the price of 3 yuan.
So Coca-Cola used the cost methodology to raise the cost of entry, blocking a wave of new opponents.
Third, how ordinary enterprises apply cost methodologies to win the competition
Friends who are familiar with me know that my main business is a loan intermediary company, and the conventional customer acquisition methods in our industry are mainly channel acquisition, Mobai direct sales, and telemarketing. In recent years, the number of practitioners has increased to form an inner volume, resulting in higher and higher customer acquisition costs and lower profits.
The leader of the industry, through brand building in the early years, has formed a cognition in the minds of users, reducing the cost of user choice, and also building some cost advantages.
In order to break the game, I have recently been optimizing the short video customer acquisition section, reducing the service fee of users by reducing the cost of customer acquisition, so as to create rich users and obtain long-term profits.
From the configuration of personnel, the acquisition of traffic, the construction of private domains, the conversion of transactions, customer management, each of these links can be optimized through continuous exploration, and the cost can be controlled below the cost of peers, and a new situation can be gradually opened, and I am still exploring.
Final words:
All competition is a competition for cost. The cost here can be marketing costs, logistics costs, procurement costs, production costs, sales costs, management costs and so on.
Just optimize the cost of one of these sections to a lower cost than your peers, and you can win the price war.
It should be noted that the purpose of forming a monopoly is not to squeeze more profits from users, but to form longer-term sustainable profits.
Don't let the dragon slayer end up as a dragon.