How can a charcoal briquettes business differentiate itself from competitors in the market?
In the charcoal briquette business, standing out from competitors means finding ways to offer something distinct. The charcoal briquettes market competition has a lot of aspects to be aware of, especially for those who live in the charcoal briquettes business.
There are lots of charcoal briquette businesses, and most of the ones who truly put their will are importers. And then some independent resellers out there also sell it in a smaller amount of quantities.
Why importer is likely getting affected by this competition? Because they compete with their brand, facing other
competitors with another brand, and then have to find some strategies to escape the competition so that they can have their market engagement.
Charcoal briquette products are also likely to have the same quality or not that difference, the gap difference may only come from the charcoal briquette type such as coconut charcoal briquettes, hardwood charcoal briquettes, etc.
Because of their “not significantly” difference in terms of quality, it gives a higher potential leading to a price war.
A price war is one of the most feared aspects when it comes to charcoal briquettes business. Then what about the importers? Charcoal briquette importers already see this as a big threat and emergency. They
see this as a giant monster that wants to flip over their dreams.
Why? Because a price war gives them a smaller profit margin and also can turn their revenue and flip it over into a profit loss or even a minus.
Because importers also have lots of expenses and do not have that high of a margin compared to when they produce it themselves (even though it’s impossible), they have a cost of buying the briquettes, shipment, packaging, cargo tax, and storing management (inventory management).
They also have other expenses for the needs of their increasing sales such as marketing costs, branding costs, and more.
They also have dangerous goods regulations and requirements, that make
they have to do the following and have to put the cost a lot higher.
This has become a frustration among the charcoal importers, because, with all of these expenses + price wars, they will have low revenue and cannot compete for the long-term project in the coming years.
But you don’t have to worry, in this article, we will give you all of the strategies and possibilities to face the price war.
There are 2 main strategies to face the price war in the charcoal briquettes business aspect:
To do the “fight back” needs to take a lot more effort and cost, it also needs to take a lot of time and patience to do it.
Fighting back also gives a bigger risk, because there are hundreds of charcoal briquettes businesses to thousands worldwide. There are also some big companies that already monopoly the charcoal briquettes price.
Giant charcoal companies and brands lead the price, but there is a big chance for you to compete with them because charcoal briquettes have lots of target markets to search. Such as shisha/hookah, BBQ (to individuals or restaurants, home decoration, etc.)
So there is a bigger chance for you to compete with them by specifying your product’s target market. You can compete but again, if you lose, there will be a higher percent chance of you having an unstable business also.
You will put a lot of money on the line to compete with them, and then you cannot have business savings in the upcoming period.
Also, if your brand is still not big and popular (your market still doesn’t know you, because their customer doesn’t receive your brand awareness). Your competitor will see the big hole in your business and will view it as a weakness. Because they also still have a lot of savings and they will use it as their weapons.
There are also other main strategies to solve this, and that is escaping the price war.
Escaping the price war is one of the best solutions, especially if you are new in this business, a small reseller, or even an importer.
Why is the best move? Because it does not put a lot more cost compared to fighting back against the price war, it is also can give you more higher margin, because you separate yourself from the competition and find a new opportunity.
But to find a new opportunity, it also needs cost and effort to do research, rebranding (if needed), and can go to the marketing also.
But there is some point I want to clarify, the two of these strategies are just for recommendation, but all of the decision is made by your business and your team.
Maybe in some conditional way that you face, you choose to do strategies of “fight back or encounters” and some of you choose to “escape from it”
So as an addition, all of your business decision is made by you. But I recommend you if you have a big brand and lots of budgets, then you can fight back, but if you still need to increase your brand awareness or you don’t have enough capital/assets, I recommend you to escape from it.
This discussion has a lot of consideration, but you don’t have to worry, we will explain these challenges in the most complete as possible and also in the most simple way possible.
Lets deep dive into this case:
This price war does not just mean between charcoal briquettes products, but it also means between types of charcoal briquettes.
Let’s analyze it first, why there are a price war that occurs in the charcoal briquettes industry?
Let’s list it as much as possible:
1. Low purchase market
The market is prioritizing more to looking for something cheap charcoal
2. Quality solutions are not a big focus for the market
3. If it’s cheap, you can buy many units (2 packs, 3, etc.)
4. Customer still not aware of charcoal products (which means the market is still not understand and un-educated about the products)
5. Brand competition
6. Cost Structure
7. Geography segmentation
(ALERT: This causes of price war list is collected from the common issue and factors, but the one who truly knows about your market is yourself. Each region, country, or even target market has its behavioral market and also its variant issues. So the best way to make it more complete is to self-analyze it. You can do this by analyzing your market research online or even doing some interviews with your own or your competitor’s customer)
From that 7 lists of price war factors, we can analyze it more with the power of “why”
– because the target market is B2C, and the target economy is middle to low-class
– because the market only focuses on price
– because the market is unaware and uneducated of the charcoal products, they choose the low quality and less good types of charcoal
– because customers love bonuses
– because customer feels their saving more money
– psychology trick of bonus, so customers are more likely to repeat orders again
– because the charcoal marketing is not reaching them
– because they are not too interested in knowing the charcoal product knowledge, and just buying it for a moment/tarsier needs.
– lots of brand that sells to anything (not specific)
– there are hundreds to thousands of competitors in your local market/target market
– cost-effectiveness
– innovative expense cut
– supply chain cashflow
– marketing budget
– any other budget that makes the product margin higher/lower
– supply and demand
From that analysis that we already dug down, maybe there are still other factors that your market has, and you can add them by yourself so the list can become more and more complete, or if from that list your market does not have that particular type, you can also erase it/change it by yourself.
So, from those factors, you can see some factors that are contributing to each other, and then you will realize that all of this is like a puzzle and your job is to connect the dots.
To know more about the price war issue in your market, I recommend you interview one of your target market
person. Maybe it can be your friends, families, or even strange people that you met. Because it will give you a more accurate realization of your market behavior.
So, after the factors have already been investigated and we found the true problem with the power of “why”, then we can continue how to solve it with the power of “how”.
