Full color led display enterprise price inevitability analysis

Time:2018-12-30 Views:332

Recently, the price war in the industry has been heard repeatedly. The contradictory trend of price increase of raw materials in the upstream last year and price reduction of application terminals in the downstream this year has LED many LED display enterprises into a dilemma, unable to raise prices and unwilling to lower prices.Compared with the hesitations of these enterprises, individual LED screens, which are also in the application layer, reduce the price by themselves when the price of raw materials rises.In the final analysis, these enterprises‘ own conditions determine that they have pricing power in the industry, and the price of products will not have a negative impact on them.At the same time, by virtue of their keen market sense of smell, they also anticipated the inevitability of price cuts.

Market expectations are too high, the phenomenon of overcapacity highlighted

Generally speaking, commodity prices are determined by production costs and affected by market supply and demand.On the surface, the current led screen macro market demand, in addition to small spacing to drive demand growth, the construction of smart city, cultural undertakings have driven market demand.In addition, the research group expects digital advertising to overtake television as the largest category of advertising in 2017, with 61 percent of DPB and DOOH AD users spending more than half of their AD budgets on such advertising last year.It is not difficult to see that the rise of digital advertising is bound to drive LED display market demand.It‘s fair to say that LED screens have a bright future, but in the current state of the industry, they look more like a mirage.

According to the market law, the current market should be increasing demand, and the price of upstream raw materials, pushing up production costs, should eventually make LED display prices rise.But now the result is a blind expansion of capacity, resulting in the market oversupply.Due to the shortage of raw materials such as lamp beads and PCB board in the early stage, the downstream manufacturers are in a panic about the shortage of raw materials, so as to continuously increase the inventory of raw materials, accelerate production, expand production capacity, and reserve a large amount of inventory, so are the merchants.Such signals lead to frantic capacity expansion upstream and downstream.However, the industry‘s expectations on the LED display market are obviously too high, and the current capacity expansion rate is higher than the market growth rate, resulting in the oversupply situation.Just because realize this problem, individual enterprise takes the lead in reducing price, cleared backlog product already, can enlarge market share again, seize an opportunity, how a "tall" word is gotten!But in addition to foresight, their own strong strength also enables them to have more say in price. Even if the price is lowered, the impact on the enterprise is very small.

Holding the right to speak on price, leading led screen enterprises "say no"

So why do large LED screen companies have stronger bargaining power?Firstly, the market share of leading LED screen enterprises in the industry is not comparable with that of small and medium-sized enterprises.Most large enterprises have years of market accumulation, strong channel laying, relatively larger and more fixed market share, and considerable sales volume.When a large number of products flood into the market, it is inevitable to form scale effect and cause price fluctuation.Second, large enterprises have better product quality, brand guarantee, easy to become the market priority option.This is not to say that small and medium-sized enterprises do not care about product quality, but in general, the production chain of large enterprises is more standardized, product quality is more stable, and large enterprises in the service, after-sales and other aspects are more likely to be trusted by people, which also makes the price of LED screen on the impact of large enterprises weakened.

Although it is also faced with the situation of rising prices of raw materials, leading LED display enterprises, with their advantages of large output and mature supply system, buy raw materials at a price lower than the market price. In addition, the large output and scale effect also reduce the product cost, so the production cost is lower than other enterprises in the same industry.In this way, compared with the ordinary LED display enterprises, the profit of the leading enterprises in the industry will be reduced by much less than that of the ordinary LED display enterprises. Moreover, the latter have strong capital, and the profits can be cut in a short time to make up for it in the future, or compensate from other business channels.For the former, it is inevitable that the decrease of profits will affect their operation, and even the failure of the enterprise due to the rupture of capital chain is not surprising.These have become the leading enterprises can easily reduce prices, but small and medium-sized enterprises are unable to cope with the important factors.

Improve bargaining power, in order to dominate the mixed situation

In the face of such a situation, small and medium-sized LED screen enterprises are particularly passive, especially in the case of the enterprise capital is far behind, a total pandering to the "price war" of large enterprises, will only from the price competition melee to profit dilemma, and then face the operating difficulties.Only by improving their bargaining power, small and medium-sized LED screen enterprises can successfully go through the industry reshuffle, usher in a better future.

Technology is king, has the leading product is equal to the control pricing power.

In fact, LED display industry development so far, there is no enough to break the pattern of the industry breakthrough technology.If an enterprise can take the lead in developing an industry-leading and original product, which can greatly meet the market demand, or even lead the market demand, it will undoubtedly become the first pricing person in the industry.LED display enterprises need to improve their innovation ability, expand product differentiation from other enterprises, make products more competitive in the market, and reduce the impact of market price fluctuations.

Carry out brand building and enhance brand influence.

The market scope of LED display industry is relatively narrow, and the word-of-mouth effect is very obvious, which means that enterprises need to strengthen word-of-mouth management of their own brands.Product quality should be put in the first place, only to ensure better product performance, better quality, will be favored by the market, bring about secondary consumption.

As there are no leading companies in the LED display industry, leading companies with large market shares and strong capital still have the right to speak on prices. These few companies, whether raising or lowering prices, have a significant impact on the whole industry and play a leading role in demonstrating other companies.