Factors that restrict the development of LED lighting companies

In the first half of 2014, LED replacement of traditional lighting products has accelerated again. Enterprises have undergone "transitional warfare" and "card-position warfare", accompanied by "price wars" that have made the market more competitive. Many practitioners feel great pressure while sighing too quickly.

The three major difficulties that constrain the development of enterprises LED lighting companies will generally face three major difficulties in the development process:

I. Reduction of operating profit margins In order to establish scale advantages, some companies adopt cost-leading strategies, actively lower prices to plunder market share, expect to establish a competitive threshold, and force other brands to follow up on price reductions and use special sales promotions, especially at T8. Tubes, bulbs, T5 brackets and other light sources are particularly fierce. Compared with the traditional lighting stage, the industry average gross profit margin dropped significantly;

Second, channel marketing costs have been greatly increased to quickly build a marketing network. Some companies have invested in marketing costs without regard to costs. Many marketing staff have invested in various display cabinets, sending samples, advertising, distribution and other preferential policies. These are in the traditional lighting era. imagination.

Third, the hidden costs have increased dramatically. In order to cooperate with product switching, the company has continuously improved and enriched its product lines. The cost of R&D has become greater. To satisfy sales, the factory has to stockpile and it quickly causes sluggish inventory, which will affect the cash flow of the company. Flows have led to a reduction in the efficiency of capital use. The increase in these hidden costs has made it difficult for companies to develop their own side of hematopoietic development.

Return to rationality and actively focus on facing such dilemma. If companies want to win in the competition, they must first have superior strategic system planning capabilities to form a correct way of thinking in competition; secondly in product planning, channel construction, and production management, etc. Must have strong operational capabilities to avoid uncertainty in the implementation of the target. Therefore, companies must eventually return to a rational state.

For many companies without channels, products, and brand foundations, "Mr.

The first is to abandon the “strategic loss” mentality. This kind of thinking mode of “selling at a low price on price and investing a large amount of marketing cost” is not desirable. Especially for some listed companies, when the stock market price pressure is high, it is very It is difficult to maintain a “strategic loss” with a better attitude, and one will be deeper and deeper in a loss-making swamp. The second is that they can start from areas where competition is relatively small and their capabilities are strong. Enterprises can adopt “focus” strategies, including product focus, channel focus, and regional focus. The lighting industry has a wide range of products, and can use “single product as king” or The way to seize market segments is to gain market advantage. This is a product focus; the lighting industry channels have diversified features, and engineering, retail, and large circulation are all different channel types. In the early stages of corporate development, multi-channel development The model is not desirable. It is not only difficult, but it will also consume too much of the limited resources of the company. However, as long as the products are well-configured, the concentration advantage is focused on a single channel, the product value is fully utilized, the channels are more in line with the corporate positioning, and they are more competitive. This is a channel focus. Similarly, regional focus can also be selected. It is not necessary to spread out across the country. The degree of development of each region and the degree of LED popularity are different. Choosing the right products cuts into different regions and avoids “widespread” marketing strategies. It can also reduce unnecessary cost investment, which is regional focus.

This is the best time and the worst time. In the end, companies that can survive and achieve development must be companies that have the integrated advantages of ideas, products, technology, channels, brands, and capital. Only by taking advantage of comprehensive advantages can an enterprise win the recognition of the society and be able to stand out in the fierce market competition. The establishment of comprehensive advantages is not a day's work, but the premise is: “live first”.