In recent years,”Contents"the word frequently appears in enterprisesCompetitionIn the context of thisPrice warIt's also very common。
On the surface, the "inner volume" is the "price war" between firms, and its underlying essence is thatValue creationA single imbalance in the pattern。EconomicsThe rationale suggests that healthy and sustainable competition needs to be underpinned by effective cost control, reasonable matching of demand and strong differential advantages. The “counter-inventory” is not a circumvention of competition, but an optimization and upgrading of the way it is conducted。
“infiltration” root causes from an economics perspective
First, discriminatory pricing and market breakdown lapses are one of the important incentives for the “inner volume”. According to the price theory proposed by the economist pigou, price discrimination (price discrimination) refers to a differentiated pricing strategy applied by enterprises over the same period, under the same product or service conditions, for consumer groups with different willingness to pay or purchasing power in order to maximize returns。
In theoretical classification, price discrimination usually includes three forms: the first category refers to the introduction of completely differentiated pricing for individual consumers ' willingness to pay; the second category involves different prices for different purchases or consumption portfolios in the form of quantity, package or quality differences; and the third category is based on observable market characteristics, such as geography, distribution channels or consumer group attributes, with differentiated prices set for different subdivisions。
In theory, discriminatory pricing can maximize returns for enterprises in different sub-markets. But in real competition, many firms are caught up in a cycle of “calculation-down-homogenization”. The failure of enterprises to effectively cover high-paying consumer groups in the competition process has led to the potential value of this segment of the market being ignored, thus further increasing the price sensitivity of the overall consumer。
Second, supply-demand imbalances have exacerbated the spread of “price warfare”. The balance between supply and demand is the basis for price formation, with the most efficient allocation of resources at the point of equilibrium. However, in an environment of excessive competition, this balance is often broken. In industries with rapid expansion of production capacity, firms may be targeting market share-taking as a primary objective, resulting in a substantial increase in energy inputs, resulting in a substantial excess of supply over demand. However, when the demand side fails to expand simultaneously, the concentration of domestic capacity in the short term will lead to increased competition, resulting in prices falling and even falling costs, and ultimately a continuing decline in the overall profitability of the industry。
Finally, the unsustainability of below-average convertibility further weakens the competitiveness of enterprises. Based on microeconomic principles, the average cost (ac) is a fixed cost and variable, an important reference for the pricing of enterprises, where the average variable (avc) is the variable that is shared per unit of production and an important consideration for the short-term operation of an enterprise. Economic theory suggests that if the price of the product is lower than avc, the enterprise loses every unit of production and should cease to operate; if the price of the product is higher than avc but lower than ac, short-term production is viable but unsustainable in the long term; and only if the price of the product is higher than avc can the enterprise be assured of profitability and support reinvestment. However, in “inventory” competition, if an enterprise competes for a market share at a lower price than avc, such a strategy may have had some effect in the early stages of market breeding, but long-term implementation will quickly deplete the enterprise's cash flow and is not theoretically sustainable。
The economic logic of “anti-internal volume”
From an economics perspective, “anti-inner volume” is not a denial of competition, but a reshaping of its structure and modalities. At its core is breaking down low-dimensional price competition inertia and directing the focus of resource inputs and competition to high ground of value creation。
Three mutually supportive paths can be derived from economic principles: restoration of pricing rights, matching supply and demand, and back-cost pricing, which are mutually reinforcing and constitute an intrinsic logical chain of “anti-inventory”。
First, precision market segmentation and differential competition. Discriminatory pricing can effectively translate the willingness of different client groups to pay into business gains. To achieve this, enterprises need to redefine their markets, not to follow the price changes of competitors passively, but to proactively formulate price strategies based on value perceptions, brand positioning and product differences among target clients. Such stratification not only increases market coverage, but also effectively avoids the risk of industries falling into price battles。
Second, from capacity competition to demand creation. Restoring pricing rights is only the first step, and consolidating this advantage requires a proactive balance between supply and demand, implying a shift from passive competition to proactive demand creation by enterprises that expand demand space through market breeding, user development and landscape building。
Finally, return to the sustainable bottom line. On the basis of matching supply and demand, enterprises also need to ensure that price strategies sustain innovation and expansion over the long term. In the short term, product pricing can cover at least avc to reduce losses from fixed costs. In the long term, fixed costs are also a cost component to be covered by the business, so prices need to be at least above the ac to achieve full profitability and have the capacity to reinvest and sustain. If long-term prices are consistently lower than ac, even if cash flows are not lost in the short term, depreciation of fixed assets, equipment upgrades, r&d, etc. Cannot be guaranteed and will eventually lead to exit from the market. This could be achieved by introducing the concept of life-cycle cost (lcc), incorporating after-sales, upgrades, services, etc. Into cost-benefit models, forming a profit mix between front-end sales and back-end services and reducing reliance on low-cost competition for front-end sales。
Positive transition from "roll" to "start"
The “inner volume” appears to be a “price battle”, but it is rooted in a single and unbalanced pattern of value creation. To achieve transformation, firms need to build a comprehensive competitive system based on precision pricing, driven by technological innovation and branding, supported by industrial collaboration and digital empowerment, with a positive shift from passive consumption to proactive creation。
First, value competition driven by technological innovation is fundamental to building long-term competitiveness. By creating technical barriers to enhance the non-replaceability of products and services, firms can shift the focus of competition from simple price comparisons to a combination of performance, quality and experience. For example, high-end manufacturing firms can maintain premium advantages based on unique processes and core proprietary technologies, while digitalization, intellectualization, green manufacturing, etc., are non-negligible additions to future competition and will create lasting differential advantages for enterprises in the global market。
Second, branding and emotional premiums can intuitively reinforce firms ' pricing rights. Brand stories, cultural identity and social responsibility not only increase user loyalty but also significantly reduce price sensitivity. Consumers pay for identity and values when the marketing focus moves from a single functional selling point to integrated value formation。
Third, cross-border synergies and industrial chain cooperation can help the industry as a whole to emerge from inefficient competition. Through industrial alliances or vertical integration of industrial chains, the cost of non-priced competition can be reduced by reducing duplication of investment, increasing resource efficiency and creating uniform standards and infrastructure。
Finally, digitalized enabling pricing and demand and supply projections provide technical support for “anti-inventory”. Big data analysis can help enterprises to predict demand fluctuations more accurately, optimize production plans and adjust stock levels and reduce the risk of excessive competition from sources. At the same time, the application of ai algorithms in client stratification and price elasticity analysis can significantly improve pricing accuracy and make the price system more scientifically sound, especially in stock-sensitive industries。
I'm the chief economist of cheng and xu jin and the chief economist of the bank
