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Breaking the Trade norm of Boom and Burst

There is a well-known law of diminishing marginal utility economics. What does that mean? When you’re hungry for three days, and finally someone gave a basket of steaming buns California. Your tears and jumped, devoured kill the first one, the world is simply the best feeling bun delicacy; then they kill you a second, still intended especially not; then the third, fourth, fifth one when you finally get that this is California buns; to the seventh, you can not tell what has not to California California; to the eighth, you begin nausea, do not want to eat any more.

This is the diminishing marginal utility. The same buns, along with the increasing number of consumer, bring your satisfaction declined.

The economics there is another equally famous law of increasing marginal benefit. When the first fax machine was born, it is almost no value. You do have an unprecedented strange stuff, but you faxed to whom? Who would be faxed to you? But with the second, third fax machines were put into use, the value of your fax machine on hand this is getting larger. When the fax machine is large-scale use, almost everyone one time, you can not do without it, it’s worth peaked.

In reality, the marginal benefit of decreasing and increasing cash like coexist. Such as drinking, the beginning is “progressive”, a mouthful from the warm-up to a little drunk, and gradually into the people of God forgot two wonderful realm; if this just good fun to come back when the mouth cup, it would have to start “diminishing” the , confusion, full of nonsense after another, and then go on to hurt liver hurt feelings.

Do the same channels. Find a new channel, it does not mean that dug up the treasure. You need time to accept the new channels, consumers used to buy from this channel it takes time. You alone alone investment, thankless task. If you have followed and to competitors, on the surface it looks like you more than a few minutes handed person, but many people put much more than a person you alone, huge momentum gradually up, consumers can enjoy the arrival of this channel more than three of the fun. So the cake bigger proportion of your points down, but in absolute terms, but most of.

New channels for climate, inevitably influx of rivals, excessive competition channel raise the threshold, you gain in this channel started to shrink even latecomers will be eliminated, as “martyrs.”

Therefore, the channel adventurers to learn new channels firmly hold on first-mover advantage, so, no matter how many players behind the increase, just to give you a sedan chair.

And for the channel, the case almost everywhere. Dealer whole-heartedly to do a product, always do limit sales. On a single product structure, together with other species, form a patchwork of product groups, not only can increase the potential for downstream negotiations, but also to share operating costs, in favor of big bets and increase profits. But once the increase of excessive product, product group is too large, will inevitably lose focus, they lost their footing, three dozen cover the pot lid, confused. And only those who always keep in mind the ability of dealers to improve their management in order With the expansion, synchronization holding nice profit level, continued to “incremental” go.

Everlasting who are those who can always break the boom-bust fate and remain “incremental” business. It takes strategy, management and prudent attitude.