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Pricing is life-and-death, and first-class companies have pricing power.

Media coverage
2019/04/15 16:42
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  Recently, due to the sluggish sales of the new iphone, the market value of Apple has evaporated by 400 billion US dollars in just three months. But why, even in the face of such huge performance pressures, Apple does not cut prices but use "trade-in" to promote sales?
  Similarly, the more expensive Huawei phones are, the more expensive the latest Porsche version is up to 16,800 yuan.
  Besides, Xiaomi, in the Internet thinking, has only walked through Lenovo for nearly 20 years. Although the high-end smartphone market has repeatedly hit the wall, it has been defeated.
  The seemingly irrelevant three things actually reflect a profound marketing problem, that is: the price issue.
  Different pricing determines the different development paths for enterprises. As one of the basic elements of marketing, price is the core and most concerned factor in the process of business development. The price determines the market choice, determines the consumer group, determines the profit space, and affects the long-term development of the company.
  Only when enterprises have sufficient profits will they have more expenses to invest in research and development, improve operational efficiency, and create more benefits for partners such as distributors and distributors, and build long-term and stable cooperative relationships. Pricing is the company's biggest strategy, and first-class companies have pricing power.
  Pricing is life and death
  Ed. Mel proposed the famous "four-four-two theory" in the field of marketing. Simply put, 40% of success depends on positioning, that is, marketing objects; 40% depends on product and price, and 20% depends on marketing.
  In the actual marketing, the marketing object is often largely affected by the price. We are used to dividing the market into high-end and low-end markets, and also habitually subdividing consumers into high-end and low-end consumers. Therefore, according to the "four-four-two theory", the price accounts for 80% of the key factors of success. Pricing is the market. The price strategy is related to the success or failure of product operation and determines the business life and death.
  1. Pricing determines the market choice.
  In a sense, Xiaomi’s past success was a success in pricing. He took a cost-effective route, quickly opened the market through low prices, and opened up a blue ocean market in the fierce mobile phone market through low prices. The capture of the Internet reeling users, parents and consumers, as well as low-end mobile phone users in cities, towns and villages, and promote the popularization of smartphones.
  It should be said that Xiaomi's success is due to the early high cost performance, but the lack of millet follow-up is also attributed to the low price strategy. A company without high gross profit is not enough to be favored by the capital market.
  2. Pricing affects corporate innovation.
  Management guru Drucker said that the company's mission is to create customers, while the company's functions are marketing and innovation. Pricing determines the company's own profitability and long-term development capabilities. In fact, only high-margin enterprise development is promising. Only high-margin enterprises are willing and willing to invest enough in research and development, marketing, and operation to improve efficiency.
  A company's self-renewal and innovation ability is the core competitiveness, and all of this must be based on the company having sufficient gross profit margin and the company to have money. In this way, we can provide better products through innovation and gain more market through marketing.
  3. Pricing determines partner loyalty.
  There is no eternal friend, only eternal interests. Business itself has nothing to do with loyalty. It is only about interest. The interest is loyal to some extent. The greater the interest, the higher the loyalty.
  Today's business is already an ecological chain management, and the enterprise itself is only a part of the ecological chain.
  Boeing has more than 130,000 suppliers worldwide, and Apple has more than 200 core suppliers in the world. In a sense, the half life of the company is no longer in its own hands. The competitiveness of suppliers and partners determines the company. The competitiveness, therefore, Ma Huateng will say "put a half life to the partner", and pointed out that Tencent's mission is to link and empower.
  Go back to Apple why not directly cut the price.
  As we all know, Apple's brand value and brand loyalty is very high. The reason why the price is not directly reduced is to maintain the interests and emotions of the purchased users. In essence, it is to continue the "high pricing" model, so that the next generation iphone can continue to sell high prices.
  If the price is cut, then Apple's profit margin will be weakened, which will affect the company's operating income, causing tremendous pressure on the stock price, and directly affect the research and development of the next generation of products, without product technology advantages, why Apple sells high prices?
  In addition, the direct consequence of the price cut is to compress the supplier's purchase price and the sales profit of the dealer. Once the dealers and suppliers have a bad time, who will be willing to cooperate with Apple, and who is willing to pay for Apple. The supply chain advantage and distribution agency system that Apple has built over the years will collapse, and this will be Apple's disaster.
  In the concept of Matsushita Yukio, the "God of Management" in Japan, "the mission of the company is to make money. If you can't make money, it is a crime." Therefore, the pricing issue is not just a marketing issue, but a strategic issue. It determines The market has affected corporate R&D and innovation, as well as the cooperation of relevant stakeholders.
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