Fighting Low-Cost Competitors

(MoneyWatch) 

It's every executive's worst nightmare: You wake up one day to find that a competitor is selling a product much like yours at a much lower price. Matching the lower price would devastate your profit margins, but ignoring the low-price gambit may prompt your customers to flee. Don't panic. Taking on a low-price competitor requires a careful rethinking of how your company does business. To start, read our Crash Course on "How to Beat a Lower-Priced Competitor" to learn about the strategies that will make your product more valuable to buyers. We've also summarized the wisdom of five strategy gurus so you'll have additional ideas on how to combat low-cost competition. To hear from managers on the front lines, we interviewed executives from Time Inc. and Sony to find out how they stay ahead of their low-cost rivals. Lastly, we looked at how some products compete effectively against low-price equivalents by raising prices and heading upmarket.