Great price reduction in good shops： stimulating the market or demeaning yourself？

Recently, Liangpin Store announced that it will implement the largest price reduction for the first time in 17 years, covering 300 products, with an average price reduction of 22% and the highest drop of 45%. This news has aroused widespread concern and heated discussion. On the one hand, some people think that this is a positive measure for good shops to stimulate consumption and give back to users; On the other hand, some people worry that this move may damage the brand image and even trigger an industry price war. Is the price reduction strategy of good shops more beneficial than harmful, or more harmful than beneficial? This paper will discuss it from many angles.

First, the considerations behind the price reduction strategy

Intensified market competition: In recent years, the competition in the snack market has become increasingly fierce, and emerging brands have emerged constantly, posing challenges to traditional brands such as good shops. In order to maintain market share and competitiveness, good shops may think that reducing prices is an effective coping strategy.

Inventory pressure: affected by the epidemic, the supply chain is unstable, and good shops may face the problem of inventory backlog. The price reduction strategy is helpful to alleviate the inventory pressure and speed up the capital turnover.

Give back to consumers: The price reduction of good shops is relatively large, which helps to lower the threshold for consumers to buy and enhance their purchasing power, thus giving back to consumers.

Second, the possible positive impact of the price reduction strategy

Stimulate consumption: the price reduction strategy is conducive to attracting more consumers to pay attention to and buy good shop products, thus driving sales growth.

Increase market share: By reducing prices, good shops are expected to further expand market share and consolidate their position in the industry.

Strengthen the connection between brands and consumers: the price reduction strategy may make consumers feel the sincerity and care of brands, thus enhancing their loyalty to brands.

Third, the possible negative impact of the price reduction strategy

Damage to brand image: A substantial price reduction may cause consumers to have doubts about the quality of products in good shops, thus affecting the brand image.

Profit decline: the price reduction strategy is bound to have an impact on the profits of good shops, which may lead to a decline in profits in the short term.

Industry price war: the price reduction strategy of good shops may lead to other competitors’ follow-up price reduction, which will lead to industry price war and have a negative impact on the whole industry.

Fourth, the focus of controversy and thinking

Brand positioning and price strategy: As a leading enterprise in the snack industry, Liangpin Store has always maintained a high brand image and market positioning. Is this substantial price reduction consistent with its brand positioning? Is there a risk of self-deprecation of the brand?

Balance between quality and price: the price reduction strategy may cause consumers to worry about product quality. How can good shops ensure product quality and safeguard consumers’ rights and interests while reducing prices?

Long-term development and short-term benefits: the price reduction strategy may have an impact on the short-term profits of good shops, but in the long run, will it help to enhance market share and brand influence, so as to achieve long-term development?

V. Conclusion and prospect

To sum up, the price reduction strategy of good shops has both positive aspects and potential risks. As an enterprise decision-maker, it is necessary to make a wise choice on the basis of weighing the pros and cons. From the consumer’s point of view, the price reduction strategy has undoubtedly brought them benefits. However, quality is always the most concerned issue for consumers, and good shops need to reduce prices while ensuring that product quality is not affected.