In recent years, the LED industry has developed rapidly, and market competition has become increasingly fierce. As an offline LED dealer, although you have the dream of making a lot of money, it is not so easy to make money in the overall weak market environment. So as an LED dealer that has been facing consumers for a long time, how should we plan our product lines and business categories in the face of today's fierce market competition? Don't go away, see below.
Three directions of product line planning
First, plan the product line according to the competitive strategy of the distribution brand. Star products: Focus on spreading brand awareness, and achieve sales accounting for 10% of the total and profits accounting for 20% through high-quality, high-price, and high-profit positioning. The product must have core technology and unique product functions, and focus on differentiated selling points. Its function is to enhance the image quality of the entire product series, establish a brand image, and arouse consumers' attention and favor for the entire series of products. And to meet the purchasing needs of high-end customers. Since customers who purchase high-priced products are not price sensitive, they can increase the selling price appropriately and obtain higher-than-average gross profits.
Profitable products: Focus on unique core selling points, achieve good profit margins through reasonable price positioning, and achieve sales accounting for 50% of the total and profits accounting for 50%. Profitable products are within the best-selling transaction price range of the overall market and have mainstream functional configurations in the market. It has the appearance or selling points that are consistent with the star model and focuses on cost-effectiveness.
Strategic products: Focus on leading functional features and achieve mid-to-high profits through mid-range price positioning, with sales accounting for about 20% of the total and profits accounting for 25%. It is within the best-selling price range in the market and has more additional features than the best-selling models without significant cost increase, making the gross profit level higher than the average.
Defensive products: Focus on competitors, limit sales through medium and low positioning, sales account for 10% of the total, and profits account for 5%. The main selling point (features) or appearance style of the main selling model of the competitor is the same or similar. In terms of price, it tried its best to suppress its competitors, forming a trend of homogeneous and low prices. However, it tried its best to belittle the product in terminal sales promotion, not recommending customers to buy it, and shaking customers' purchasing confidence in this type of model.
Experience products: focus on customer sources and attract attention. Low quality and low price limit sales, sales account for 10% of the total, and profits account for 0%, blocking the low price strategy of competing brands. Products are launched in the market at shocking prices, special offers, etc., attracting consumers' attention through super value and low prices. The experience model should be significantly different from the host model in terms of appearance or performance configuration, and the supply quantity and sales at terminal sales points should be limited.
Through division of roles for products and cross-combination of marketing, comprehensive sales results can be achieved. The best sales is customer experience. Obviously, the price of star products is high and the brand premium rate is high. The main function is to establish the brand image of the product and should do less promotion to create high gross profit for retailers; profit and strategic products mainly win by quantity and strive for more promotional resource momentum. Defense and experience products use quantity to gain gross profit; products are mainly tactical products to cope with competition from competing products. They are low-margin or no-margin products and are mainly used for store celebrations or festivals to attract more popularity.
Second, plan product lines based on local market segments. A product should target a target market segment.
Broken down by function. For example, in the category of home appliances, storage-type electric water heaters are available in computerized and mechanical versions, gas water heaters are available in constant temperature and forced exhaust, and washing machines are available in drum, fully automatic, and semi-automatic versions. The second and third-tier terminal markets are mostly dominated by models with relatively advanced functions, while the urban market is mostly dominated by models with affordable and simple functions.
Broken down by channel. In terms of business formats in the home appliance industry, terminals include KA chains, specialty stores, mom-and-pop stores, building materials stores, plumbing, gifts, project group purchases, real estate supporting facilities, etc. Home appliances retail terminals are characterized by large-scale sales and mainly focus on simple functions; building materials terminals generally target medium and high-end consumer groups and focus on models with advanced functions.
Third, the length and width planning of the product line. The length planning of the product line is mainly based on competitors and market characteristics. Growth brands should adopt a strategy of slightly higher high-end and slightly lower low-end. A slightly higher high-end will help improve the image, and a slightly lower low-end can achieve price resistance. New brands that have just entered the market should formulate a product line covering all high, medium and low-end products. After receiving sales feedback from the market, they should then design and formulate it based on the characteristics of competitors and the market, appropriately compress the product line, and create a product series with their own comparative advantages. For example, in the kitchen and bathroom industry, urban markets and county markets face different types of main competitors. In order to facilitate the formulation of different market strategies and competitive strategies according to different types of markets and competitors, we can plan two sub-product lines for two different markets, so as to form two product lines with two punches and powerful punches.
Product line width planning should be designed based on brand competitive positioning at different stages, and corresponding efforts should be invested in products in different price segments. The product line width of each price segment should be proportional to the sales share of that price segment. That is to say, the width of the product line in the main sales price range should be increased, and the proportion of the number of models provided in the total number of models in the product line should be equal to or slightly greater than the proportion of sales in this price range to fully ensure the competitiveness of the product line in this price range; in the high-end and low-end price ranges that account for a smaller proportion of sales, the width of the product line must be appropriately tightened to reduce cost investment and give terminal point-of-sale display space to products in the main price range.
Three directions of business category planning
First, professional focus strategy: becoming a category merchant. In fact, focusing on a good category can make dealers make a lot of money, while choosing a bad category can cause dealers to lose money at least, or make dealers suffer a lot of damage and vitality. Category selection is a very important issue for dealers. Dealers who are greedy for perfection are often unfamiliar with the industry and have limited energy, causing special brands that were originally well-run to be messed up. Nowadays, as terminal competition becomes more and more fierce, the efficiency of many product categories is actually declining, or even very poor. Dealers should follow the principles of capital turnover and cash withdrawal, consider the return on investment, and be willing to give up product categories that are not profitable and strong enough. They must not be greedy for more and seek bigger, and try to choose fewer but more refined product lines. The idea that good and bad are everywhere is just self-deception. Only by developing valuable product categories will there be profitable returns. It is not advisable to blindly be greedy for more. For example, the home appliance industry specializes in water heater category integrators, which is one direction. Focusing on all categories of electric water heaters, air-energy water heaters, gas water heaters, instant water heaters, and wall-mounted boiler central hot water systems, it forms a supplier of household hot water supply solutions.
There are many ways to focus, including market focus, product focus, and customer focus. Market focus means selecting a relatively small market segment, especially the high-end market, for intensive cultivation, and transforming from a mass market to a niche market. For example, Gu Dianming of Zhengzhou Gas Appliance World focuses on high-end gas wall-mounted boilers and becomes the leader in Henan's gas appliance industry; product focus means selecting one or two star products, not winning by quantity and variety, but by making a product to the extreme and gaining room for survival in the fierce market competition.
Customer focus means focusing on the big ones and letting go of the small ones. We do not treat all customers equally, but treat them differently, firmly grasp some big customers, improve service quality, and improve customer satisfaction until customers become dependent.
Second, based on the fulcrum, implement cross-border and multi-category profits. At present, cross-border diversification mainly manifests itself in two ways:
1. After establishing its position as the leader in subdivided categories, extend and expand the product categories it distributes: from a single home appliance franchise to building materials, lighting product line marketing, etc. However, to achieve business diversification, dealers must operate products across industries and categories based on their own strengths and capabilities. The prerequisites for dealers to implement diversification are: first, they must become the leader of a certain market segment, so that they are qualified to engage in diversification. For example, if you become the local leader in the refrigerator category in urban markets, you can add high-growth categories such as water purification. Secondly, there must be a logical relationship between various businesses to support and help each other, rather than being completely independent and unrelated to each other. For example, the successful diversified expansion model of home appliance dealers in recent years has extended from home appliances to home furnishings and building materials, from white appliances to kitchen appliances, from kitchen appliances to building materials cabinets and LED lighting, from heating pipes to home appliances and bathroom appliances, and from plumbing fittings to water heaters. These can all support each other.
2. Cross-border operation: You must have a fulcrum first, and then there will be opportunities to superimpose countless zeros. Marketing has no boundaries. As long as you are strong enough, you can operate it. But how to do cross-border cross-border? First of all, you need to figure out why you want to cross-border and what is the purpose; whether it can help you build a sustainable competitive advantage; whether it can distance you from your competitors. Secondly, after the target is clearly selected, the implementation path must be clearly thought out, and how it will be implemented, whether through mergers, acquisitions, or the formation of a new company team. These must be thought through clearly. The last step is to do it. For example, in recent years, major home appliance dealers have begun to cross-border bathroom, cabinet, and security categories.
Third, differentiate competition and achieve sustainable development. From popular product categories to niche categories, traditional home appliance dealers, for example, have been transforming into emerging categories of water purifiers and air-energy water heaters in recent years. The urban market has begun to become saturated with major appliances such as refrigerators and washing machines, and market competition is also a red sea, dominated by price wars. However, water purification and air energy are still blue ocean markets that need to be developed. Although the total target market is not large, drinking water safety is the general trend, and the energy-saving advantages of air energy water heaters are gradually recognized by consumers. These two markets are gold mines for dealers with networks covering counties and towns. The original major appliance categories have entered the saturation and maturity stage of their products. At this time, grafting new growth categories into them will not only provide short-term profitable supplements, but also provide a new direction for performance growth in the long term.
The "post-85s" who grew up in the Internet era have become a major consumer group with urgent needs. Their consumption habits, cognitive channels, and shopping methods have posed new challenges to dealers' existing product marketing models. The Internet has made information more symmetrical, but the demand for good products remains unchanged. The only change is that they are more picky about the choice of good products, have a stronger demand for services, have higher functional requirements for products, and have more direct emotional appeals. Therefore, in this era where products create marketing miracles, whether a dealer can provide a product portfolio that makes users scream determines whether the dealer can make big money.
ANNA