What is the reason for lowering the price of LED high bay light in 2017 ?
LED high bay light manufacturers large expansion, compared to medium-sized manufacturers with more obvious economies of scale. Another effect of the expansion is that the new capacity is more efficient than the previous generation, with lower average costs and the gradual marginalization of manufacturers who are unable to update their equipment.
Incremental revenues and profits come from a number of areas, some of which are the market that marginal firms are leaving, and the other is the incremental demand that is stimulated by falling prices. Considering that LED high bay lights have not been reduced for two years, some demand has been restrained to some extent, and it is not impossible to increase the demand by lowering the price.
Only if the price elasticity of demand can so big as described in the above model is not certain, if demand price elasticity is very small, cut down the price can't stimulate new demand growth, the logic may be is not established.
Although there is uncertainty about the extent of the revenue growth that comes with lower prices, the price cut by the leading manufacturers is still, to some extent, a significant blow to the margins. Industrial lighting LED high bay light, in particular, is currently the marginal factories mainly involved in the market, big manufactures directed against small factory who used 2835 LEDs , one-time reduce prices by 20%, a consortium is actually pushing prices directly LED to the brink of most small and medium-sized industrial and mining lamp manufacturers under the variable cost line, forced that some manufacturers into loss and exit.
By cutting prices to adjust the price to the position of maximum profit, at the same time forced exit edge manufacturers, and reduce new entrants to the manufacturer's earnings estimates, nip in the bud, probably several LED high bay light giant main motivation strategy of active price behavior.
Therefore, the price reduction of LED high bay light is the inevitable result of the change of the internal and external factors that maintain the price stability, and the result of the strategy behavior of the leading manufacturer. In the long run, LED high bay light will return to the trend of falling prices. The extreme price collapse and continuous rise are only accidental phenomena that occur under certain conditions.
Incremental revenues and profits come from a number of areas, some of which are the market that marginal firms are leaving, and the other is the incremental demand that is stimulated by falling prices. Considering that LED high bay lights have not been reduced for two years, some demand has been restrained to some extent, and it is not impossible to increase the demand by lowering the price.
Only if the price elasticity of demand can so big as described in the above model is not certain, if demand price elasticity is very small, cut down the price can't stimulate new demand growth, the logic may be is not established.
Although there is uncertainty about the extent of the revenue growth that comes with lower prices, the price cut by the leading manufacturers is still, to some extent, a significant blow to the margins. Industrial lighting LED high bay light, in particular, is currently the marginal factories mainly involved in the market, big manufactures directed against small factory who used 2835 LEDs , one-time reduce prices by 20%, a consortium is actually pushing prices directly LED to the brink of most small and medium-sized industrial and mining lamp manufacturers under the variable cost line, forced that some manufacturers into loss and exit.
By cutting prices to adjust the price to the position of maximum profit, at the same time forced exit edge manufacturers, and reduce new entrants to the manufacturer's earnings estimates, nip in the bud, probably several LED high bay light giant main motivation strategy of active price behavior.
Therefore, the price reduction of LED high bay light is the inevitable result of the change of the internal and external factors that maintain the price stability, and the result of the strategy behavior of the leading manufacturer. In the long run, LED high bay light will return to the trend of falling prices. The extreme price collapse and continuous rise are only accidental phenomena that occur under certain conditions.
Comments
Post a Comment