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Caterpillar Inc., the world's largest maker of construction and mining equipment, has announced that it will begin to raise the prices of most products globally from January next year, with a maximum increase of 2%. It is understood that Caterpillar’s ​​explanation for this large-scale price increase is to respond to “existing industry factors and the existing and expected overall economic environment†without giving specific reasons.
As the world's largest enterprise of construction machinery, Caterpillar's price increase will not only be an independent act of a company, it will certainly cause no small response in the industry.
Coupled with initiatives such as Caterpillar's establishment of China in the beginning of this year, it will be possible to change the overall outlook of the industry.
Whether the price game among enterprises, whether the industry structure changes, or whether it will trigger a new round of technology competition will also gradually emerge in the near future.
Corporate pricing becomes a problem
The global economy has shown a warming trend, but this is only an early spring. Caterpillar's high-profile announcement of price increases is undoubtedly a boost for the global construction machinery market. The horn of fierce competition in the industry may have been blown.
For other construction machinery companies, apart from costs and other factors, how to deal with Caterpillar price increases is a difficult problem, which requires full consideration of the market game. In particular, Caterpillar announced that it is expected that the rate of price increase will vary from region to region and product to product. This will be even more problematic for many companies that fully exploit the international market. There are two common methods, one is to follow up and increase their prices. This needs to be based on strong technical strength or proper marketing strategy. In the current situation where some overseas markets are still unrecovered, how can we guarantee corporate profits by increasing prices, and this will become the choice of some export-oriented enterprises. Another method is to maintain the stability of the price, so as to make the product more cost-effective advantages. Take advantage of price to occupy a part of market share. For most Chinese companies, due to their own strengths, maintaining product price stability may become the mainstream practice.
In the case of foreign-invested enterprises, the specific response measures they have taken are still unknown. One thing is certain is that these companies are also passively accepting the reality of Caterpillar's product price increase, and it is difficult to fully grasp the pricing power of autonomous pricing. In other words, Caterpillar's price increases will inevitably affect the price adjustment of many companies in the industry. If Komatsu, Hitachi, Case, Volvo and other companies form a concerted effort with them, the prices of construction machinery products will change significantly.
In addition, because Caterpillar's product chain not only in the field of construction machinery, but also extended to heavy machinery, internal combustion engine and other fields, which also led to the price increase, will affect not just an industry.