What is the price war?
In business, the price war is an act of a competitive price reduction between two or more businesses. The result is when competitors sell the same products using a strategic price aimed at getting an average consumer business. The price war may have Domino Domino on the market, affecting companies and consumers, because with a drop in prices, the availability of products for consumer and business profits can be reduced.
There may be many causes of price war. The location or perception of the product as a commodity can lead consumers to decide on the basis of price. Businesses that are just starting on the market can offer lower initial prices to get support in the field. If there are few competitors in the industry, businesses will always be up to date in the prices of competing enterprises and can try to compare them or beat them. Businesses may also feel that they have to simplify the way the products are produced and reduce prices to stay above the water in induits that would otherwise force them to eagleazně to reduce or stop the output; Similarly, businesses can drastically reduce prices to survive the threat of bankruptcy.
as advantageous as the price war can be the average consumer in the short term, consumers should be aware that their actions could affect their actions during the price war in the long run. Always decide to buy from a competitor who offers the lowest price can result in the destruction of businesses that offer shopping options. For example, if all consumers decide to buy a product from a company that offers the lowest price, companies selling the same product at higher prices can be based on businesses. As a result, selling the product at the lowest price will be the only one that has remained on the market, and the product can be the price, but once all the competition is crushed.
reactions to price wars can know Varies between industries and belowniche. Businesses usually have to consider whether the price war really exists or whether it seems that it is simply happening due to short -term promotional strategies. Businesses can respond by ignoring the challenge, reducing prices, maintaining prices, distributing products into two separate products or changing the quality or promotion of the product.
Generally, involvement in the price war against the main chain is not the best step for a small business. Large chain stores can participate in predatory prices and encourage the price war for the only purpose to cause smaller society to move from business. The chain trade can then accept a former share in the small enterprise market.