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Many companies are competing on the basis of low prices. Yet, Price Wars represent a fundamentally different dynamic than simply trying to get an edge on price. These begin when competitors aggressively and repeatedly set prices below established levels. In many cases, companies that initiate Price Wars engage in self-destructive behavior, which can lead to downward pricing spirals.

Whenever Price Wars erupt, companies find themselves in commodity traps. Profits narrowed considerably and weak competitors had difficulty staying in business. It has been a common view that the way to winning a Price War is to have a superior cost structure. However, further studies showed that this is not the only way to gain the upper hand.

Under the right circumstances, it is possible for a company to win a Price War by leveraging specific set of strategic capabilities.

Winning a Price War is possible and even the weakest company can succeed. It just requires the ability to leverage strategic capabilities and master the 5 rules of engagement:

1. Prepare for Battle
2. Pick the Battlefield
3. Choose our Enemy
4. Stay under the Enemy Radar
5. Align Revenues with Cost Structure

Even if a company is at a disadvantage when it comes to cost, it can still launch a Price War and win.

This deck also includes slide templates for you to use in your own business presentations.

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Source: Price War Strategy PowerPoint document

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This business document is categorized under:
Business Framework Primers

File Type: PowerPoint (pptx)

Tag(s): Pricing Strategy

Number of Slides: 23 (includes cover, transition slides)

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Upload date (first version): Jun 16, 2020

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