Ways to fight a prise wars

Price wars, like any war, stem from an interest. A company in the market may initiate a price war to grab a larger share of the pie, or a newly established company may start one to enter the market.

If you're not familiar with what a price war is, the logic is straightforward. It's an effort to attract more customers by lowering the prices of products or services. Although price is not the only metric we look at when buying a product, it is one of the most important. If a company lowers its prices, and the competing company responds with a price cut (enters the war), prices can drop very quickly and may even fall below the cost of production. If the war reaches this point, it can result in the bankruptcy of one or both companies, or they may incur significant losses.

Therefore, before entering this dangerous competition, it's crucial to know how to respond to the rival company's declaration of war. After reading this tweet, you'll discover that you have many options other than engaging in the war.

There are two main ways to combat a price war:

1. Non-price actions

2. Price actions

Let's start with the first one:

Non-price actions:

• Of course, the first thing you should do is establish diplomatic relations with your competitor and try to reach an agreement. You can propose a certain price and set different price ranges for each product.

• If the cost of your products is lower than that of your competitor, you can use this as leverage. You can inform your rival that your costs are lower and that, in a potential price war, you could lower prices even further than your competitor. This is a threat, and remember that if you are bluffing, there's a possibility it might backfire.

• Instead of entering a price war, you can choose to compete in a different area. Rather than focusing on price, you can prioritize quality. You can add different features to your products and strive for differentiation. You can appeal to people who demand quality rather than those looking for cheap products. But keep in mind that in some sectors, differentiation or quality differences may not be very noticeable. For example, in the internet service provider industry. Additionally, you can emphasize that your competitor's cheap products have very low quality.

• The last option is seeking help. You can ask for help from the government, your partners, or other companies you do business with and highlight that they might also suffer losses in the event of bankruptcy.

Price actions:

• You can implement a complex pricing strategy. If your product range is extensive, you can go for very different pricing for different products. You can significantly reduce the price of some products and not reduce others at all. Additionally, instead of directly lowering the price, you can offer discounts for a certain period, create coupons and promotions, or introduce package prices. You can also implement a customer loyalty program. If you don't know how to create a customer loyalty program, let me know in the replies, and I'll write a tweet on that topic.

• Another thing you can do to combat a price war is to introduce a new, more economical product into the market without compromising the prices of your original products. This way, you can appeal to quality enthusiasts as well as budget-conscious individuals. If you don't want to tarnish the prestige of your brand with low-quality products, although it's a bit challenging, you can create a new brand and equip that brand with economical products.

• The last option is to engage in the war. Unfortunately, sometimes there may be no other option. This is similar to a boxing match where you and your opponent take turns hitting each other, and in the end, the most resilient one stands.

Bonus:

You can choose not to participate in the war and not care about what your competitors are doing. According to the definition of capitalism, companies, and even individuals, always try to maximize their profit. However, some may think that it's not worth the stress to make a bit more money and may be quite happy to serve loyal customers and earn a bit of stress-free money. Perhaps this is the best option; after all, isn't happiness more important than money."