A recent managers’ survey showed that the top marketing issues plaguing them are price, differentiation and new launches. Pricing comes up as the top issue. Here are 3 tips to avoid price wars:
1) The most important concept to acknowledge and practice is that we should strive firstly for profits, then market shares. Brand managers often got the order wrong, so they sacrifice profits to gain market shares. Not many companies can survive this, especially if your company is small or medium in size.
2) Be a gentlemen in the market. Read your competitors’ cues on pricing and pricing change. Don’t start a price war unnecessarily, and if you want to have a temporary price off, signal to your competitors that its only for a while.
3) Don’t offer discounts too often, else that will resemble a permanent price off. Coupons attract a lot of current users, up to 80% of them. So you are actually shrinking your profits to sell to customers that will buy your products anyway, regardless of price offs.