What Is a Price War?

"Price war" generally refers to a kind of commercial competition between enterprises by competing to reduce the market price of goods. The main internal driving forces are market pull, cost promotion and technology promotion. The purpose is to suppress competitors and occupy more market share. , Digesting inventory, and so on, such as the upsurge of Jingdong Dangdang price war.

Price war

"Price war" generally refers to the conduct of business competition between enterprises by competing to reduce the market price of goods, but also broadly refers to the use of price as

The size of the industry's growth space and value space, the speed of technological progress, and the length of the value chain will all affect the changes in product prices. With the introduction of the competition mechanism, the market has gradually started and entered the right track, making large-scale price reductions possible.

Price war is an inevitable product of the market economy and an important part of marketing. Price war can directly benefit consumers, quickly promote market expansion, and increase

The price war is to sacrifice profits at the expense of gaining revenue, which is tantamount to drinking and quenching thirst and exhausting. If the company engages in long-term

In the fierce competition environment, based on the reality of the enterprise, even in the face of modern developed marketing technology and the variety of marketing strategies, the role of price cannot be ignored. The price competition environment has not disappeared, and the price is still the enterprise. A competitive ace to master.

Out of

Users always welcome manufacturers' price reductions, and they will always be the beneficiaries of price reductions. Although people's

Price war case one

2011 Jingdong Dangdang price war

Reason for price war

On the morning of December 21, 2010, in response to the Jingdong Mall launching a price war on Dangdang on Weibo, many people in the Weibo industry expressed their views. They believed that JD started a typical Judo war and considered JD The struggle is a realistic version of the "Battle of the Three Kingdoms".

The source of this book price war, according to Jingdong Mall CEO Liu Qiangdong (Weibo) revealed that it was "Dangdang's banning of JD.com" by JD.com, while JD.com announced that the book "until the price dropped to zero." Subsequently, Dangdang announced that it had invested 40 million in 3C, department stores, books and other products to significantly reduce prices. A few hours later, JD.com announced a promotion of 80 million yuan.

Price war profile

First round of price war

In December 2010, just after Dangdang.com went public in the United States, Jingdong CEO Liu Qiangdong posted on his Weibo that JD.com's emerging book business had been "blocked" and took the lead in reducing prices to promote price wars. Dangdang subsequently claimed that it had spent tens of millions of dollars to launch a promotion to counterattack. The two sides officially launched a price war, which was terminated due to the intervention of the General Administration of Press and Publication.

Second round of price war

In the second round of price war in March 2011, Li Zhongcun, an industry expert and founder of Sci-Tech News, believed that JD Mall hoped to expand new business and moved into a well-established book base, which would naturally be retaliated. At the same time, some analysts believe that JD.com's constant provoking of price wars with listed companies is to pave the way for its listing in the United States, which has attracted the attention of the US investment community.

The book price war between Jingdong Mall and Dangdang.com has been upgraded again. "If you make a penny of gross profit in three years or a penny of net profit in five years, I will dismiss all of your entire department staff!" Putting "ruthless words" on the top will not allow the company's book department to make a profit in order to counter the low-priced strategy of Dangdang.com, an old book e-commerce listed company.

Price war case 2

2012 Jingdong Suning price war

I. Event Overview

Jingdong CEO Liu Qiangdong set off an e-commerce hegemony on two Weibos on August 14, 2012. Afterwards, senior executives including Suning and Gome responded to Liu Qiangdong on Weibo. For a while, the e-commerce industry was filled with smoke. , A new round of e-commerce war kicked off. With the "random entry" of Dangdang, Yixun and other companies, it is evolving into a scuffle of the entire domestic e-commerce industry.

Event combing

provocative

Liu Qiangdong sent two Weibos at 10 am on August 14, 2012: JD.com has zero gross profit in three years. All of them are guaranteed to be more than 10% cheaper than Gome Suning chain stores, and will send staff to Suning Gome stores.

Challenge

Li Bin, Executive Vice President of Suning Tesco, responded at 4 pm: The prices of all Suning Tesco products are necessarily lower than JD. Any netizen who finds that Suning Tesco's price is higher than JD.com will immediately adjust the price and pay.

Scuffle

Dangdang Li Guoqing announced that "to face the battle, Yi Xun.com, Yitao.com, etc. also joined.

Reasons for the price war

Liu Qiangdong, Chairman and Chief Executive Officer of JD Mall, announced at about 10 pm on August 14, 2012 that Weibo's price war and verbal war on Weibo were caused by the use of local government relations and decided to rise. Resist.

4. Views of all parties

Yang Fan, a veteran of the home appliance industry: At the end of 2011, the old trade-in was overdrawn, and many domestic appliances markets were overdrawn in advance. Since 2012, the market has shown a weak state, and the industry has declined. The subsidy policy has problems such as exchange difficulties in the field of e-commerce. In addition, JD.com's 10% price difference and physical stores combined with their own promotional activities and some subsidies are not obvious advantages. They are not attractive to consumers. For JD. Sales effect.

Lu Zhenwang, an e-commerce observer: The purpose of JD's move is to crack down on Gome and Suning's ability to sell off-line appliances. Compared with Gome and Suning's core sales of household appliances, the price comparison of 3C products is the core of JD.com's competition. JD.com actually uses its "partial products" to fight the "important products" of the US and the Soviet Union.

Hong Shibin, Vice Chairman of China Household Appliance Marketing Committee: To some extent, appliance manufacturers are happy to see the price war of e-commerce, because the former has the need for diversified development of channels. "The more intense the competition between e-commerce, the The greater the power to speak. "

Yu Guofu, member of the Policy and Law Committee of the China Electronic Commerce Association: Selling goods at a price below cost without valid reasons is prohibited by the Anti-Unfair Competition Law. Once the opponent drops to the cost price, JD either defaults or constitutes unfair competition.

Well-known financial commentator Ye Tan: At present, the e-commerce industry does not make money as a whole, 0 gross profit is just a gimmick. Suning Tesco relies on Suning Appliance's strong capital market to support the price war, and Jingdong Mall relies on venture capital to fight the price war ...

V. Reflection

The "price war" of e-commerce has started again, and the lack of business models behind "crazy" is highlighted.

Analysts in the industry believe that "price war" is still the most effective marketing method for e-commerce, but bottom-line low prices are not a sustainable means of development; such "burning money" is not rational enough, and vicious competition that may follow As a result of the destruction of the market environment, it is still consumers who are ultimately harmed.

Price war case three

Dangdang Book Borrowing Shop celebrates price war in 2013

I. Background: On October 16, 2013, Dangdang.com s 14th Anniversary Opening Ceremony officially began. As the pillar category of Dangdang.com, books were capped at 50% off 500,000 books and 40% off 200,000 books. Explosions such as 30% off for 100,000 books, 50% off for children's books, 50% off for 100,000 digital books, and 5 yuan for the top of the book started the first shot of the feast of the opening ceremony of the anniversary.

Second, the price war profile: The books participating in the event involve literature youth, social sciences, children's books, parent-child, life, science and education, economic management inspirational and other aspects, mainly based on the best-selling books on the Dangdang Book List, and discounts The highest of the year. And Dangdang's Digital Pavilion also launched "Harvard MBA Classic Course Complete Works", "Women Want to Marry Men Want Elopement", "Ask One World", "The Great Bill Gates" and many other caps ranging from 1 dime to 5 yuan. Popular good book.

Third, other categories of Dangdang join the price war: In addition to books, clothing, department stores, home appliances, home textiles, pregnant and infants and other categories of collective price, various full reduction, capping, straight down through the entire network, the price offensive is strong.