How to Beat a Lower-Priced Competitor
It's every company's nightmare: a competitor enters your market with a similar product priced at a fraction of what you currently charge. You need a strategy for beating the low-ballers. So what's the best way to proceed?
On the one hand, all you need to do is drop your prices below the competition, and buyers will beat a path to your door. On the other hand, this approach will land you in a price war, and there are no winners in a price war — only survivors. Even if you manage to run your competitor out of business, chances are you may not have much of a business left when the battle is over.
Luckily, it is possible to beat a lower-priced competitor without crippling your profits. That's the good news. The bad news is that you'll need to make major operational changes, and you'll need to rethink how you communicate with customers. The changes required may not be for the faint of heart, but they're better than the alternatives. So gird your loins, corporate warriors; you're about to embark on one of the biggest strategy challenges you'll ever face.