Automatic Flap Disc Machine Market Confronted with Price War

Currently, automatic flap disc machine market in China is confronted with overcapacity and price war. According to relevant report, with an increasing number of companies producing automatic flap disc machines, the production capacity becomes overburdened, resulting in more serious industry price competition, which leaves a bad effect on automatic flap disc machine market.

Ren Jiaming from Xiangyang Chaoguang Abrasives Co., Ltd. revealed that at present, the price of these machines has declined from around ￥200,000 to ￥90,000 and even lower, close to the cost price. Although a large number companies have got involved in the price war, their price has to be lowered to compete with others, including the popular DongGuan Houjie FENGRUI Abrasives Factory. "Now the market is in a mass because there is no standards for price. The phenomenon not only exists in the automatic flap disc machine market, but in flap discs market", said a flap disc marketing manger from Shandong Province. He also predicted that many small workshops are likely to go bankrupt.

Price war is commercial competition characterized by the repeated cutting of prices below those of competitors, which, in the long term, may threaten their survival. Liao Zhouxiang from DongGuan Houjie FENGRUI Abrasives Factory revealed that the company will stick to its own strategy and build up independent brand so as to produce competitive products. Liao also suggested that a set of standard be set in the abrasives industry to control price wars.

Reactions to price war

The first reaction to a price reduction should always be to consider carefully. Has the competitor decided upon a long-term price reduction? Is this just a short-term promotion? If it is the latter, then the reaction should be that relating to short-term promotional activity, and the optimum response is often simply to ignore the challenge. Too often, price wars have been started because simple promotional activities have been misunderstood as major strategic changes.

But if it seems that it is a long-term move then there are many possible reactions:

Reduce price: The most obvious, and most popular, reaction is to match the competitor's move.
Split the market: Branch one product into two, selling one as a premium and another as a basic. 
React with other measures - Reducing price is not the only weapon. Other tactics can be used to great effect: improved quality, increased promotion, perhaps to improve the idea of quality.