Paint companies find their way under heavy pressure

The paint industry at this stage can be said to be full of variables and challenges, especially the national paint companies in the country are facing the double attack of rising raw material prices and strong market expansion of imported “foreign brands”. Under such a market background, most paint companies opened the prelude to price increases. The price increase is undoubtedly a frustrating move for paint companies to obtain meager profits. But how much will the price increase bring to paint companies, and how do distributors and consumers view price increases?

Product prices, paint manufacturers, "strong men break their wrists for survival"

The increase in the price of paint products will inevitably bring about some profit margins for paint companies. However, this method of price increase is not what paint companies are seeking. Looking at the current domestic paint companies, most of them are price advantages to win the market, it can be said that the current market conditions in recent years brought too much unpredictable variables to the paint industry, many paint companies have been unable to digest this alone Pressure, product prices are also reasonable, according to rising costs is inevitable.

The heavy pressure facing paint companies is mainly reflected in several aspects:

1, raw material prices have been amazing. Since the second half of 2003, the prices of raw materials for coatings have gradually increased, and the profitability of enterprises has been greatly reduced. Starting from June 2004, prices of some raw materials for coatings have risen dramatically. The price of styrene-acrylic emulsion rose from 6,200 yuan per ton to 9,600 yuan per ton, an increase of 54.8%; xylene increased from 2,600 yuan per ton to 8,600 yuan per ton, an increase of 207%; propylene glycol rose from 5,800 yuan per ton to 12,500 yuan per ton. Yuan, an increase of 155.5%; paint cans rose from 13 yuan each to 16 yuan, or 22.3%. Such large raw material prices have made it difficult for most of the paint companies to maintain their existing products.

2. The price of oil rose and transportation costs increased. The national fuel price has increased by about 20% over the previous year, resulting in an increase in freight costs. This has a relatively large impact on the economic efficiency of paint companies. Since the implementation of the new traffic law by the state on May 1, 2004, some paint companies have been unable to use vehicles to overload vehicles and reduce the cost of loading dangerous goods (oil paints) with ordinary vehicles. The transportation costs borne by paint companies are even higher. Big. The price increase of a product is a very complicated matter that affects the fate of a company's development. Especially for civil coating products, it is of great importance. The main reason is to consider that dealers resist new prices so that the product market will be lost. This price increase was basically implemented by companies with brand-name products.

3. The property market is sluggish and the market is shrinking. In early 2008, the real estate industry experienced unprecedented major adjustments, major reshuffles, and major changes. The original boom in the real estate industry is gradually cooling down, and the original madness is gradually returning to rationality. The specific performance in the property market represented by Beijing and Guangzhou has emerged as a situation with price and no market, while housing prices in Shenzhen and other places have continuously declined. A large number of homebuyers are waiting and watching the currency, leading to a relative shrinking of the paint market for home improvement.

4, "Foreign brand" expands greatly. At present, there are more and more foreign paint brands are familiar to us, such as Nippon, British ICI Dulux, the United States Sherwin-Williams, Netherlands Lai Wei, Germany BASF and so on. At present, the United States Prominent company first landed quietly. Afterwards, many other foreign companies have set up general agents or manufacturing plants in China. Their technical level, company strength, and international sales experience and ability are not to be underestimated. As far as the current Chinese market is concerned, only ICI and Nippon’s products account for 30% of the paint market in China. In the middle-to-high end product sector, the two companies control almost half of the market. This trend is Chinese paint family companies have brought a huge impact.

If companies just blindly seek profits at the expense of the market, they will inevitably weaken the competitiveness of paint companies. Only when paint companies maximize profits, can they have the strength to compete with foreign forces, blindly shrink and concede, and try to make profits for a while. And giving up long-term planning, how can such a company be powerful and how can it compete with foreign companies?

The price increase of a product is a very complicated matter that affects the fate of a company's development. Especially for civil coating products, it is of great importance. The main reason is to consider dealers resisting new prices to cause the loss of the product market. The price increase was basically carried out by brand-name companies. The increase was generally controlled at 10%-15%. There are three reasons for the price increase: one is that raw materials are greatly increased; the other is because the product freight rate is greatly increased; the third is to cancel. Low-end products, products to the high-end development. After the prices of brand-name products have risen, non-brand-name companies have begun to raise their prices with caution, and the price increases are generally 3%-8%. Brand-name products companies have reduced their burden on enterprises by increasing their prices, and their profit margins are still relatively large; non-brand-name companies have increased their prices, but because of the low prices of their products, some companies are still struggling to deal with them. Another way out. This is also the inevitable law of market development, while purifying the market.

After the price increase, what should paint companies do?

After the paint companies have adopted price increases, they must not assume that the crisis will be spent peacefully. Price increase is only the initial task of coping with the market crisis. The author believes that companies should do the following work after several price increases:

1. Find a market and develop a blank space. The agents or distributors directly managed by coating companies generally go to the municipal and county levels, and the performance assessment of distributors and agents is limited to this. The gaps in the vast rural market are still large. Although most rural villages currently consider the use of ceramic tiles as the preferred product for most exterior wall decorations, as rural living standards increase and incomes increase, most consumers of rural building materials are gradually seeking More beautiful, more personalized decorative products. Therefore, paint companies should send professional and technical personnel to the grass-roots level to guide agents or distributors to pay close attention to the development of the rural market and tap the remaining potential markets. Take the "county-centred as the center, radiation surrounding villages and towns" approach to win the rural market.

2, build brand, create brand value. More and more paint companies are aware of the value brought by the brand recognition of the market. Reviewing the development path of the electric appliance industry, it is not difficult to conclude that only the tree brand can be based on the industry and gain market recognition. Therefore, paint companies must increase their advertising. Of course, advertising should be consistent with local conditions and customs, and its effect is better. The form of advertising should also be deepened to cater to local folk customs. The targeted claim will only be twice as effective, and bombardment will only be costly and wasteful. It is very difficult for a paint company that does not advertise to develop and expand the market in a short period of time. Consumers must have a process of cognition and acceptance. It should be noted that foreign-funded coating companies have developed rapidly in China, and the competition among domestic paint companies has been so fierce that companies will not be able to seize the market until they first expand their influence.

3, increase support for dealers. The relationship between paint companies and distributors is actually a "fish-water relationship," and it has been separated from distributors. Paint companies can't occupy the market better. Therefore, paint companies should strengthen the relationship between dealers. Especially after the price increase of products, most dealers are faced with the dual pressures of rising product prices and little market demand. Manufacturers should give distributors greater support. For example, formulate some incentive policies, guide the dealers to organize their own sales teams, and help dealers to better develop the secondary market. Strengthen the training of dealers' business capabilities. In terms of sales, more promotional activities were carried out to narrow the gap between companies and distributors.

“If a product does not increase in price, the enterprise cannot survive at all. As a franchisee of a company, it must take pressure with the company at a critical moment. Of course, the more severe the market environment, the more the coating company should consider the interests of the distributors. After all, dealers are limited in their ability to withstand pressure. If they blindly raise the price of their products and at the same time adopt “pressing” actions against their franchisees, such paint companies are still not as cooperative.

Product prices, paint dealers "car to the mountain to find the way"

The dramatic increase in paint prices caused by rising prices of raw materials and various operating costs and increased labor costs has indeed made it difficult for distributors to “digest”. In the face of this market situation, it is difficult for dealers to respond. It is believed that most paint distributors do not want to increase the price of their own products. However, this is not always the case. After many visits by the author, I also received different views.

1. The market environment is severe, and the company announces that the price of the product has risen. This kind of price increase behavior can be understood. When it comes to the relationship between distributors and paint companies, I think it should be a "fish-water relationship." If there is no paint company, paint distributors are naturally not possible. If a paint company fails to make a profit, the company will not be able to survive at all, which will naturally lead to the disappearance of paint dealers. In fact, it is like investing in stocks. If a company is facing bankruptcy, then the losses of investors who hold their shares are naturally heavy. “Now it's very difficult to do paint, and there are so many porridges and there are seven or eight paint stores near the shops. The competition is getting bigger and bigger. The market is now sluggish, and now everything is increasing, and it's pressure as a paint distributor. It is really big, and the days of heart-thinking coatings companies are naturally not easy, and the pressure on a distributor is naturally the same for coating companies.If products do not increase prices, companies simply cannot survive and join as a company. At a critical moment, it is necessary for companies to bear the pressure together with the companies, and of course, the more severe the market environment, the paint companies should take into account the interests of dealers, after all, dealers have limited ability to withstand pressure, if blindly raised. The price of the product, and at the same time to take pressure on their franchisees, such a paint company is not as good as not cooperating with the yellow boss of Jordan paint in Shunde area told me.

2. Paint distributors, as the terminals of paint companies, directly face the market and consumers, and their pressure is sometimes greater than that of paint companies. Many paint distributors have to bear the pressure alone to maintain their old customers and at the same time better attract consumers, and they use the mode of not increasing prices or saying that they don’t increase much to maintain the market. "The situation in the first half of this year was very unsatisfactory. The sales in the first half of the year could not be compared with that of last year. The most fundamental reason was the slump in the property market this year. In addition to the current raw materials, the price of oil is rising, and the production costs of coating companies are also rising. A lot, paint companies face the situation of such a folder, there is no way to increase prices. In fact, the dealer's day is even more sad. Dealers face pressure, and business pressure is not the same, dealers want to develop the market, The product must be recognized by the consumer. To increase the price of the product, it is necessary to promptly explain the reason for the price increase to the old customer, but the increase cannot be too large. In the end, it can only sacrifice their own profits, and hopes that small profits will be generated. The sales team to develop the market is somewhat unrealistic for the distributors. The dealers' strength is quite limited, and the current labor costs are also rising. The dealers should consider the importance of the source and the throttling. How can they be better? To attract customers is the real way out.”

Joining paints is actually like investing in stocks. If a company is facing bankruptcy, then the loss of investors who hold the shares is natural.

For the paint market after the price increase, what kind of work should distributors do? The author thinks that we should start from three aspects:

1, to retain their own quality customers. To prevent distributors from having an unstable state of mind and do their job in a timely manner, but for some “problem” customers, we must take this opportunity to replace them; look for a reputation, a market, and honesty in our region as our partners.

2, must increase the cash flow rate. This is a time when the country's top economist Lang Xianping participated in the township enterprise summit in southern Jiangsu in April this year. For example, if the goods returned for 100 dollars are not sold for 110 yuan, it would be better to set the price to 120 yuan, and then I would use 11 yuan for promotion; this would seem to make less money, but because With such a vigorous promotion, the speed of capital withdrawal can be accelerated, and then it is possible to go for the second shipment and earn a second money. Therefore, we must increase our promotional capabilities to speed up our capital turnover.

3, to arrange their own product structure. Some low-end products can reduce the price slightly; the main thing is to use high-end products to grab the market, in addition, we must do a good job of personnel training, waiting for the opportunity to strike out, the opportunity can be encountered without seeking. Creating opportunities while waiting is the key to opening up the market.

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Slion Industrial Co., Ltd. , http://www.cnbathtub.com

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