In Topics in monetisation

“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. 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 emphasise it. As such, you must also try to mitigate customer habituation. This is what I call the “commodity mindset.” We can do this by leveraging recent findings in cognitive psychology. Third, you may be too proud (or lack the right insight) to see that your actions trigger a price response from the rival. The tendency to be self-serving is harder to treat because it operates below the level of consciousness, but again there are some corrective measures. This session presents these three perspectives on competition and suggests ways to gain the upper hand.