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Lead-in Case Analysis

Liangpin Puzi on "Lowering Price but Not Lowering Quality"

Nowadays, the characteristics of consumer sovereignty in various industries are becoming increasingly apparent, and the leisure snack industry is a typical example. At present, the entire leisure snack market is still growing, but there is also a influx of a large number of players, competition has become more intense, and supply has become extremely abundant, with consumers becoming increasingly dominant. In this situation, in order for snack brands to achieve deterministic growth, they must start from the perspective of consumers and meet their preferences. What are their preferences? Recently, Pinduoduo's market value has surpassed Alibaba, which indirectly reflects that consumers are more rational and value cost-effectiveness. Snack brands also need to put effort into quality and price to make consumers feel the change from "value for money" to "value for money".

Among numerous brands, Liangpinpuzi clearly has a keen ability to capture changes in the consumer market. In the face of a more rational consumption situation, Liangpinpuzi specifically emphasizes the need to adhere to the development path of high-quality snacks, but internally needs to have a new perspective on "quality" from the consumer's perspective. One of the conclusions of this thinking is that Liangpinpuzi believes that it is necessary to maintain more affordable product prices. Therefore, an action of "reducing prices without compromising quality" is sounding the horn.

Taking the nut category as an example, the price reduction of nut products such as summer magnolia, pine nuts, and almond trees after price adjustment can reach up to 40%. The pork jerky with the highest ordering rate has dropped by 40%. From the adjustment range, we can see the determination of Liangpinpuzi to lower prices this time. This is clearly not a price war, but a self correcting action to return to the original intention and benefit consumers.

Over the past seventeen years, Liangpinpuzi has been able to continuously rise to become a leading brand in leisure snacks because it adheres to the promise of "conscientious quality" and "everyone's shop" as stated in the brand name.

The most important part of Liangpinpuzi's is to eliminate all waste that customers perceive as worthless, and ultimately achieve "price reduction without quality degradation". Secondly, how do we implement it? The key is to optimize various sub links, including raw materials, supply chain, packaging, logistics, and so on. Ultimately, achieving "price reduction without quality degradation" through a combination of lean management. However, in today's more rational and practical consumption trend, for many consumers, taste and health are the most important, followed by appearance. Therefore, now Liangpinpuzi classifies the raw materials for transportation, using different models and grades of raw materials to make different types of products.

Is there any further cost control besides the product itself? Packaging and transportation losses are often overlooked by many brands, but they are also important links in reducing costs. For more tangible consumers, the importance of packaging bags is also decreasing. Liangpinpuzi dismantled the packaging bags one by one and found that replacing aluminum foil with transparent high barrier plastic without affecting the shelf life and taste can not only facilitate recycling, but also reduce costs by 8.62 million yuan by 2024.

For consumers, after enjoying more affordable prices, they often worry about sustainability.

After all, there are many business cases where the market is dominated by low prices before prices increase. To make "price reduction without quality degradation" truly sustainable, enterprises cannot rely solely on cost control, but also on differentiated competition to establish deep barriers and form a foundation for healthy development. At the same time, we must uphold altruistic thinking to make development more sustainable.

In addition, unlike the current popular mass selling snacks, Liangpinpuzi has established a long supply chain that directly traces the origin of raw materials. Many companies are reducing costs and increasing efficiency, but the difference between good product stores is that they not only focus on themselves, but also drive suppliers throughout the entire industry chain, making them participants, contributors, and beneficiaries of cost reduction and efficiency improvement.

As early as 2020, Liangpinpuzi visited nearly 30 suppliers and helped them improve their lean management capabilities through 12 dimensions such as standardized operations, automation, and continuous flow operations. As a result, they established a cost database and digital management system. The effect is also very obvious. What enterprises need to change is their thinking and ability to cope with changes, while what remains unchanged is their willingness to offer benefits to consumers and their commitment to quality. No winter is insurmountable, no spring will not come. Those who can wait until spring must be enterprises that know how to change and remain unchanged. (Source: https://zhuanlan.zhihu.com/p/669932298)

Read and consider the following questions:

Q 1: As a consumer, what do you always consider when you buy snacks?

Q2: In order to attract consumers, What special strategies does Liangpinpuzi adopt?

Q3: What are the possible opportunities and threats for the brand?