MoonFox Analysis | Grabbing the Market, Consumption Transformation under the Low Price Strategy
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However, it is undeniable that the pace of development of a large number of once fast-growing industries has slowed down under macro factors such as the global economic downturn and international social unrest; The scissors difference between M1 and M2 has widened, and more consumers choose "saving" instead of "spending", and "careful calculation and strict budgeting" have become the main theme of the consumer market. On the whole, the long-term growth of the consumer market in the future is still under significant pressure.
In this context, the "low price strategy" began to be favored by more enterprises. With price reduction, subsidies and focusing on the markets in lower-tier cities, the competition among enterprises is becoming increasingly fierce. In the long run, does the low price strategy work? After acquiring users and occupying the market, how can enterprises further achieve user retention and long-term operation?
I. From high-end to cost performance, the tea-based drink market subverts itself
HEYTEA and Nayuki were the first to start, and the price reduction method has long been nothing new.
Take HEYTEA as an example,
In 2021, the high pricing strategy began to come under pressure due to compounding macro and other factors. HEYTEA began to focus on innovative products, including freshly squeezed phyllanthus emblica, bottled sparkling water/light milk tea, etc., but the popularity was always limited. In 2022, IP co-branding became its core strategy, with significant results in cooperative marketing such as HEYTEA x FRAGMENT and HEYTEA x 3CE.
From
Date |
Average monthly customer flow index |
MAU (million/person) |
2024/3 |
510,643 |
16.13 |
2024/2 |
430,822 |
12.39 |
2024/1 |
432,150 |
11.76 |
2023/12 |
443,465 |
18.32 |
2023/11 |
423,414 |
10.12 |
2023/10 |
463,065 |
11.72 |
2023/9 |
457,795 |
11.24 |
2023/8 |
408,027 |
15.40 |
2023/7 |
387,358 |
9.76 |
2023/6 |
361,533 |
7.93 |
2023/5 |
318,280 |
6.94 |
2023/4 |
294,948 |
5.70 |
2023/3 |
274,002 |
6.47 |
2023/2 |
261,491 |
6.87 |
2023/1 |
231,830 |
16.13 |
Data source: MoonFox iApp & iBrand (MoonFox iApp & iBrand) Data cycle: |
The statistical results only contain applet data, excluding ecological traffic data such as web pages, application clients and Quick App. |
Generally speaking, although the strategy is effective, the magnitude of high-end market is still limited. In 2022, the store traffic and applet MAU data of HEYTEA began to fluctuate and decline. In the context of consumption downgrading, HEYTEA began to officially focus on the markets in lower-tier cities.
In
In the second half of 2023, HEYTEA and Nayuki announced further price cuts for their products, and the
II. The coffee market with continuous involution and fierce competition
"Let coffee return to a reasonable price". Compared with tea-based drink, the price war in the field of coffee started earlier.
In 2017,
But with the departure of the founders of Luckin, they brought their low price strategy and rapid expansion to their new brand -
Comparison of Offline Customer Flow Index and Number of Active Business Stores among Leading Coffee Brands in the Chinese Market in 2024
|
Offline Customer Flow Index ( |
Number of Active Business Stores (Units) ( |
|
2,847,213 |
6,431 |
Starbucks |
1,787,452 |
6,849 |
|
1,467,712 |
13,080 |
Data source: MoonFox iBrand Data cycle: |
Based on MoonFox Data,
As for the low price strategy, COTTI chose to further lower the average order value after entering the market. At the initial stage of brand establishment, the average order value is
Meanwhile, with the fermentation of the "price war" between Luckin and COTTI, low price gradually became an important feature of the coffee market and brand consensus, and "how to be cheaper" began to become the core focus of emerging brands. For example, Mixue Ice Cream & Tea, which is famous for its cost performance, incubated the coffee brand "Lucky Cup" in 2017, focusing on low-priced coffee drinks and drip coffee bags; For example, Jueco Coffee, which continues to lower the price of the basic model and introduce American coffee for
III. Simultaneously focus on the markets in lower-tier cities online, and there are rich cases in the fields of e-commerce and games
The "low price" strategy is not only fermented offline, but also the low-priced method in many fields online has been implemented earlier and achieved remarkable results. The first is the e-commerce industry that intensifies the involution and the leading platforms compete fiercely with each other.
In 2018,
Not only
Take JD.com as an example. In 2023, JD.com began to fully implement the low price strategy. In March, it launched a special channel of
From
Date |
Repetition rate |
|
41.3 % |
|
49.7 % |
|
52.5 % |
Data source: MoonFox iApp; Data cycle: The statistical results only contain application client data, excluding ecological traffic data such as web pages, applets and Quick App; Repetition rate - coincident users / union |
On the whole, regardless of the platform tonality and service characteristics, the market strategies of the leading platform gradually converge, and the low price strategies of different forms and dimensions have achieved certain results, and the giants are also gradually eroding each other's share.
Based on MoonFox Data, Taobao, for example, in
Not only in the e-commerce industry, have low prices also frequently appeared in the marketing cases of the game industry.
With the strong support of WeChat and Tiktok, and the accelerated integration of ultra-leisure and multi-category method, the mini-game market has developed rapidly, and now it has gradually entered the stage of accelerated competition. As a result, the pressure on medium-level developers has further intensified. In this context, a large number of medium-level developers rely on the relatively low development cost of mini-games, and begin to choose to start from the unit price to seize market share.
Take marketing materials as an example. Based on DataEye data, in the past 30 days until
IV. Avoiding the trap of low price, quality/brand should be the core
Lowering the price of a product is in itself consumer-friendly behavior. Enterprises gain market share and cultivate user loyalty by sacrificing profits or even some losses. But at the moment, more "low price" strategies are going to extremes, and some price wars are beginning to destroy the enterprise business model. Meanwhile, some brands are facing a "lose-lose" situation in which the interests of franchisees are damaged and the quality of products obtained by consumers is reduced.
Take the industry as an example. As for tea-based drink brands, large-scale price reduction leads to the decline of the quality of tea products, and broken tea and inferior fruits cannot guarantee the taste and have food safety hazards; In the coffee market, a large-scale price reduction on the brand side will give franchisees greater stocking pressure, and problems in the supply chain will make a large number of single products out of stock for a long time; Even in the game market, excessive marketing around low-priced internal purchases will significantly affect the overall development of the mini-game industry, as a result that bad money drives good money out of circulation.
Under the general trend of consumption downgrading, users' consumption habits tend to be more rational. In our view, low prices should be a means, not an end. Enterprises should focus on the integration of low price and brand identity, and make clear the subsidy strategy that meets the needs of key users; Meanwhile, ensuring the core competitiveness of products, quality and service are still the key factors for enterprises to develop, acquire and maintain competitiveness in the long run.
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