“There is no victory at bargain basement prices.” (Dwight D. Eisenhower)
How can you stop a costly price war or, better still, avoid it altogether? What does it take to become a price leader? These questions are pertinent in many markets, and the answers lie in understanding that the “fight” unfolds on three fronts. First, part of the blame certainly rests on the actions of the rival, and your task here is to influence behavior by sending unequivocal, credible and legal signals. However, price is not the weapon of choice unless there are enough customers in the market who demand it. As such, you must also mitigate customer habituation—what I call the “commodity mindset.” Finally, you may be unaware or too proud to see that your actions trigger a response from the rival. This cannot persist. This double session uses different means to present these perspectives on competition and suggests ways to gain the upper hand.