price war. price war occurs as a result of two or more companies reducing product prices to obtain a large number of customers pro-commercial...
Price war (prices war) occurs as a result of two or more companies lowering prices for products with the aim of obtaining a larger number of customers loyal to a competitive trade. This war may take place with a view to increasing the market share. These wars reduce the profit margins of companies.
- Lot of products
Increased production and low demand for products create momentum in unsold products, which at times drives firms to reduce prices.
- Presence of similar products in the market
In the absence of similar products and can be substituted, this will result in price reductions by some firms to raise sales or obtain a larger market share.
- Loss of clients for a competition company
When her client company loses for another company that makes sacrifices and lowers prices for gaining clients again.
- Use of the pricing resilience strategy
A number of company managers believe that pricing flexibility helps to raise sales and profit in the long run, which makes them more likely to reduce prices.
- Focus on product value
Most companies focus on price competition without giving sufficient value to the product, which makes them less value for price, and in order to avoid this competition and enter the price war, they must focus on the value of the product and what makes it different from competitors, take into account the consumer ' s vision of the product and what it looks like to buy your own products and work on price for the product on a value basis.
- Development of pricing guidance
The development of pricing and product-dividing guidance by type and price greatly facilitates the search for products whose price is commensurate with the wishes and circumstances of the consumer. This strategy protects the company ' s distinct offers and correct product promotion, which makes the company special among competitors.
- Evaluation of the company ' s performance
There are some points that need to be taken into account in order to avoid engaging in price wars, where the ability of your company must be defined and a certain policy must be formulated by anticipating future market movements, and the prices of competitors must be defined, as well as offers made either by your company or the competition companies.
- Focus on product quality
Although price is the most important thing consumers are looking for, quality is a key factor for any product. The price alone will not be enough to earn customers. On the price side, consumers also want a good product, with a distinct value and quality, so if you want to win the price war, you need to focus on quality and add other features to create a large space between you and competitors that is sufficient to attract clients.
- Showing your privileges and strengths.
Show your strengths and advantages to the competitors, it will affect the competitors and make them think about lowering their prices, which will help you win the price war.
- Strategic price reduction.
Work to reduce prices strategically, you can modify some prices for certain products on which price reductions are acceptable, so as to avoid the greatest loss and protect your products. Thus, the price war (prices war) has always had results and there is a price for companies involved in this war, there are few companies that can win this strategy if properly used, and avoid errors that the company may cost to lose its profits and market value.