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Most companies in a bid to retain their market or gain more, price becomes an arsenal. They find every strategy to lower price. As soon as they make the move, their competitors follow suite and the cycle continues until one eventually keeps a low price that they barely can keep up to their over head cost despite reduced cost of production, cheap labour or workers retrenchment. This is what price war can do to an organization. Ways to exit the price war is your strongest weaponry not the price arsenal.
This price way is virtually seen in every industries with every company trying to make their products most affordable. What you need is not to win the price war but to exit the price war and leave the way for the mini companies. Here are 4 ways to exit the price war.
1. Build a brand:
People always have a reason for buying a product. Some buy for the luxury and some buy out of emotions. Build your brand around those reasons. Apple no doubt is the king of brands. Having built a trusted and reputable brand, have a high pricing to the products. They are off the price war. This is what having a reputable brand can help you enjoy.
Related: How Apple built their brand
2. Build Trust:
Trust is beyond having integrity and doing what you said you will do. Trust is a matter of competence and showing great track records of great delivery in your services. When you gain trust in the market, increase in price would go along way to differentiate you from other businesses.
Related: 4 essential pillars to gaining trust in business
3. Increase value:
value addition is a great way to stay off the price war. When you offer value like no other one, increase in price becomes a reward. Add more value to your product if you must increase the price. People can tell the difference between cost and value. let the cost of your product not just be in the price but in the cost of not using the product. Add so much value that customers begin to see what it will cost them for not using it, only then would they pay a high price to have it
4. Increase price:
Staying off the price war is the goal. This would involve you differentiating your product, use of incentive and testing your market. Check my article on how to raise price and still win the market. If this is achieved, you always can enjoy a price increase and still win big in the market.
Related: How to gain competitive advantage.
A case study of the current ongoing events in Telecom industry in Nigeria. The competition had always been on price reduction, Nigeria Communication Commission (NCC) interfered to bring about a regulations in pricing which obviously didn’t help. It wasn’t long one of the players couldn’t cope up and had to hand over. One of the player hinges on “quantity and cheaper” data for surfing the internet while another hinges on “quality and readily available” data and call bonuses with obviously a high price. What’s the point, while the price war was ongoing which brought to an end to one of the players. Another player focused on increased price but quality services.
In conclusion, pricing is not the only competitive tool to use in the fight for gaining market share. There are other strategies aside price like value addition and 6 more. Read the article on how to increase price and still win the market to find out more and also the article on how to gain a competitive advantage
Share your opinion in the comment box and let us here your testimony when you’ve applied these strategies. Success!