What has the price war brought to security companies?

Recently, Haikang and Dahua have successively launched low-priced cameras, which once caused the security industry's high attention, and even a certain degree of panic. The price war the industry people are worried about seems to be exposed in the face of anxiety. Last year, the price cuts of Haikang and Dahua DVRs caused many small-scale DVR manufacturers to close down. This year, they also adopted similar measures on cameras, which made small businesses feel the fear of the end of the day. In fact, this alone is not enough to produce a lethal price war. At best, it is a fuse and a cinchifying agent. Since the second half of last year, channel distributors have already issued relevant signals, and some security manufacturers have already lowered their prices and sold them until this year.

Whether it is from economic theory or reality, the price war is a thoroughly double-edged sword, hurting people. In Western developed countries, numerous business wars have proved this without exception. That being the case, why do companies have to conduct price wars? What is the price war brought to security companies?

Perspective price war

Everything has two sides, price war is no exception, the advantages are obvious, you can quickly expand sales, increase market share, effectively fight against competitors, fight is the real power, hard work; disadvantages are also very dazzling, and clearly price cut means The shrinking of corporate profits is also a blemish for brand damage, which will damage the reputation and image of the target market for the brand. If a drastic price war continues, it will cause the company's vitality to be seriously hurt, even to a desperate situation. There is a premise for the price war is that companies that initiate price wars must have considerable strength. They are leaders in the industry and even industry giants. Since the price war is a double-edged sword, once launched, it is not a single enterprise that can control it. It is the truth.

There is a common misconception among customers that manufacturers are fighting for price wars. He is good at collecting profits from fishermen. If there is an excessive price war, companies will not be able to maintain their normal operations, which will inevitably reduce the quality of products in foods and pharmaceuticals. The home appliances industry and other industries have already had such examples. Capsule incidents were some of the best examples. As Ms. Luo Jing, general manager of Boshen Electronics, who is in charge of the writer, said: “I never advocate a price war, not my fear of a price war, and I don’t have a certain amount of profit to produce high-quality products and provide quality services.” I believe that security companies respect brand building, in itself is to be distinguished from competitors, resulting in brand benefits, and price war to a certain extent is to negate the added value of the brand.

Although the price war is one of the most effective and easiest ways to participate in competition, I believe that for security companies in the low-profit era, they do not want to fight price wars, but I still want to remind the security community in good faith and use price wars with caution.

The reason for the price war

The price war is not just in the security industry, unless it is a monopoly industry, otherwise, no industry can escape the baptism of the price war. The price war in the security industry is different from other industries. Because there is almost no absolute strong enterprise, the price warfare characteristic is short in time, little in intensity, and high in frequency.

China's security industry is a new industry. It started relatively late. Before 2002, the security market was relatively profitable. There were few competitors, and the profit of single items was high. From 2002 to 2007, security companies sprang up like blowouts and competition intensified. In 2006 ushered in the first round of price wars. As a whole, the security industry is still immature and there are many areas to be perfected. The industry association's regulatory power and influence are extremely weak.

The core technologies of the security industry are in the hands of large multinational corporations such as Japan and South Korea. Chinese security companies rarely have core technologies, and if they are, they are mostly marginal technologies. This directly leads to a low technical barrier in the security industry and a large number of competitors. The lack of technological innovation, the rough production process, and the extensive management make the homogeneity of security products very serious. The industry basically does not have any technical secrets. As long as there are new products on the market, it will not be a month or so. Have it all.

Security companies have low investment in fixed assets, low entry costs, high versatility of assets, and low exit costs. Although the current industry entry cost has increased compared to a decade ago, it is still relatively low, resulting in a proliferation of security and security markets. The situation has naturally intensified competition and has also added to the confusion in the security industry.

The security industry is a very special industry, not only the user's particularity, but also because of the low technical content of products, low operating thresholds and so on caused a strange phenomenon - product development faster than the market development speed. This makes security products have already entered the mature period, while the consumer market is still in the lead-in period, the previous price war is more because the industry entry barrier is low, and the market development is relatively slow, there are public manufacturers to grab a customer, leading to manufacturers to reduce prices Happening. Nowadays, it is the channel that exerts pressure on manufacturers. Although the current security market has grown considerably compared with before, the demand for the security market has not been released.

What is commendable is that most security companies attach great importance to the road of branding. Many companies also employ planners. Even the establishment of brand management centers like Boshen Electronics has not only one or two companies in the marketing department; unfortunately, many companies There is no essential point in brand building. There is no professional talent for brand operation, and the power of the planner has not been well developed. Lack of brand positioning, unclear brand personality, homogenization of advertising, and homogenization of ideas.

In summary, the security industry has no reason not to fight price wars, but it is of little use; unfortunately, the price war will exist in the security industry for a long time. The author boldly predicts that the security industry will at least fight one price war in the next five years. The same intensity will not be too great, because the profits of the manufacturers are already very thin.

Reflect on price war

The security industry has experienced two wave price wars, what has brought to security companies? Many people may say that purifying the security industry is undeniable that price warfare has such a function. After the reshuffling of the security industry, it will indeed eliminate those small-scale, low-productivity, poor-quality, poorly-operated enterprises, but do not forget. Due to the inherent flaws in the security industry, the overall barriers to entry in the industry are low, and there are always potential profiteers who are entering the market quietly. Only when the average margin of the security industry is around 15% will the entrants significantly decrease.

If the security industry thinks that this alone, it is impossible to fundamentally resolve the chaotic but intense competition. Repeated price wars constantly probe into the bottom line of the profits of security companies, which is detrimental to the sound development of the industry as a whole and it is difficult for companies to develop core technologies and brand management.

I believe that whether it is a price war or a technical warfare, or channel warfare is not appropriate in the security industry. Some people proposed to fight quality war. Humans think so and believe that God will laugh. These concepts are still the marketing concepts of the developed countries during the Second World War. They are worse on the concept and they are on the move. The security companies must use modern marketing. Concepts, rather than guarding against the old product concepts and marketing concepts, since they all come on the road to branding, why return.

The search for differentiated marketing is not infeasible in the security industry. Product homogeneity exists in any industry. This is the inevitable result of the market economy. Why should we hang on the tree of the product? The brand can be different and the culture can be differentiated. Channels can be differentiated and positioning can be differentiated. The same wine produced by Wuliangye why Jinliufu can survive? Why can Dell, which is famous for assembling computers, become a multinational company? Almost no Nike shoes, why is it still a strong brand, expensive? The same workshop production of the package, where the guest than why not LV, although people's LV production costs only 300 yuan, but the price can be 30,000?

Security companies should jump out of the price war to see the price war, think about why they have such a high brand value!