You need discipline and prudence to deal with aggressively low competitor prices. Again and again companies respond to price attacks with knee-jerk reactions, often resulting in escalation to full-on price wars.
The consequences are fatal: An alarming 58 percent of companies are involved in a price war and have been for years. Worse – a price war typically has no winner ‒ everyone ends up worse off. That’s why any price reduction should always be thoroughly considered before acting.
Why is the competitor cutting prices? How else can you react other than through price? How will competitors respond to your actions? What will the result be for you and the entire industry in the end? Top companies have security systems in place to avoid emotional, exaggerated and irreparable price reactions.
Advice of Simon-Kucher experts:
Prevent spontaneous price cuts; accept carefully planned price cuts only if your organization has presented you at least
two non-price-related alternatives.