For manufacturing companies, rising raw materials, logistics, manpower and land and other related costs have made the company’s survival and development difficult, and the profits that were previously proud are also declining now, which makes it survive in the cracks. Manufacturing companies have become more difficult. So, in the turning point of this industry development, how should manufacturing companies deal with it?
What causes the profit of the machinery manufacturing industry to fall?
From the overall situation, the decline in the profit of the machinery manufacturing industry is on the one hand, the market demand growth is slowing down, and on the other hand, a large number of repeated constructions lead to excessive expansion of production capacity, resulting in vicious competition in the market.
In addition, the production cost is not only the raw materials, but also the indirect production costs such as land lease and water and electricity. Besides, the cost of packaging reinforcement and transportation, environmental certification, etc. also make the industry’s gross profit margin smaller and smaller. Cost of brand promotion. In the context of consumption upgrades, consumers are paying more and more attention to the strength of the brand, so they need to invest a lot of marketing expenses.
For some small mechanical processing plants, the ability to control the market is limited. On the one hand, there is no reasonable product system, on the other hand, they do not know how to develop new markets, but they prefer to struggle in a highly competitive place. It may focus on promoting conventional products for a long time, but there is never a high-margin product.
Therefore, for small and medium-sized mechanical processing enterprises, in response to the decline in industry profits, it needs to be considered in many aspects.
How to deal with the decline in industry profits?
In general, in order to cope with the decline in profits, we must first understand our own enterprises, find their own corporate advantages from controlling costs, distinguish the characteristics of other companies, and effectively manage prices. At the same time, a company wants to increase its intensity and focus on strategy based on price, and then implement it.
At the same time, it is necessary to establish a company-specific product system and find the difference between the products or services of the company. One step in the upgrade is to find opportunities that the value model’s business model cannot cover. Become the “leader” of the industry, and then master the “pricing power.” Effective pricing is a shift in the perception of trading to win those that are less valuable.
Secondly, in the era of rapid technological development, adapting to the market and transforming potential markets will enable greater profitability. With the rise of personalized demand, the demand for non-standard items has increased. To reduce the purchase price, it is necessary to use the convenience and speed of the Internet.
In the future market competition, if you want to avoid being eliminated by the market, you need to understand your own company, understand the market, and comprehensively enhance your brand strength and market competitiveness.