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IV. Price war
Phung Ba TienID: 1101017368
Structure
1• Definition
2• Consequence
3• How to win the price war
4• Summary
Definition
Consequence
How to win price war
Summary
What is the price war ?• Be known as cost leadership• Struggling for market share• Cutting down the prices of their
goods/services
Definition
Consequence
How to win price war
Summary
What are price war good for?
Absolutely nothing.
Of course, no firm should ever
initiate them
Definition
Consequence
How to win price war
Summary
Economically devastating and psychologically debilitating
Toll on profitability
Definition
Consequence
How to win price war
Summary
Understanding customers' price sensitivities
Price policy
Definition
Consequence
How to win price war
Summary
A B3 When should we
use price policy to win the Price war ?
a Identifying a large and growing segment of price-sensitive customers
b Having a strong brand
c Be relatively strong in finance compare to competitors.
d Achieving economies of scale by expanding the market
e Consumers are the upper-class
f Having a cost advantage
Price policy
Definition
Consequence
How to win price war
Summary
Non-price policy
Definition
Consequence
How to win price war
Summary
The best way to escape a damaging price
war is not to jump into the fray at all” (Rao,
Bergen, and Davis, 2000).
Non-price policy
Definition
Consequence
How to win price war
Summary
Re-target Your Market
Focus on quality and service
Non-price policy
Definition
Consequence
How to win price war
Summary
Alert customers to the risks
For example
FedEx’ s slogan : "When it absolutely,
positively must be there on time"
Non-price policy
Definition
Consequence
How to win price war
Summary
Link a price cut to something else
Definition
Consequence
How to win price war
Summary
if you don’t want to be at the bottom of
the market fighting over prices with your
competitions, then be prepared to raise
the bar above the usual or general playing
level.
Ecercise
Cutting down the price
Economically devastating and psychologically debilitating
Toll on profitability
Ecercise
Response to price war
Price policy
Segment of price-
sensitive
4. ……….
5…………
Achieving of economies
scale
Non-price policy
6,,,,,,,,,,,,Re-target Your Market
Focus on quality and service
Link a price cut to
something else
Having a cost advantage
Be strong in finance
Alert customers to the risk
• Thank for your attention !
