### 날짜 : 2023-12-01 08:36 ### 주제 : Price Wars #pricing #마케팅 #공부 ---- ### **6.8 Price Wars** > A price war is a competitive situation in which rival businesses, often within the same industry, engage in a series of price reductions or aggressive pricing strategies to gain a competitive advantage. Price wars can have significant impacts on businesses, consumers, and the overall market. #### **1. Causes of Price Wars** Price wars can be triggered by various factors, including: - **Overcapacity:** When there is excess production capacity in an industry, businesses may lower prices to fill unused capacity and generate revenue. - **Market Entry:** The entry of a new, aggressive competitor into an industry can lead to price competition as existing players try to defend their market share. - **Product Similarity:** In industries where products or services are highly similar, price becomes a key differentiator. - **Cost Reductions:** If a business achieves significant cost reductions, it may choose to pass those savings on to customers through lower prices. #### **2. Effects of Price Wars** Price wars can have both positive and negative effects: - **Consumer Benefits:** Consumers can benefit from lower prices, which can lead to increased affordability and improved value for money. - **Profit Erosion:** For businesses, engaging in a price war can lead to lower profit margins and reduced profitability, especially if prices drop below production costs. - **Market Consolidation:** Price wars can drive weaker competitors out of the market, leading to consolidation and reduced competition. - **Brand Damage:** Repeated price reductions can damage a brand's image and perception of quality. #### **3. Strategies in Price Wars** Businesses employ various strategies during price wars: - **Matching Competitors:** Businesses may match or undercut competitors' prices to retain market share. - **Differentiation:** Some businesses choose not to participate directly in price wars and instead focus on differentiating their products or services through quality, branding, or added value. - **Price Leadership:** A market leader may set a stable, higher price to discourage price wars and maintain profitability. #### **4. Escalation and Resolution** Price wars can escalate if competitors continuously lower prices to outdo each other. Escalation can be financially damaging to all parties involved. Resolution may occur when competitors recognize the negative impacts and agree to stabilize prices or find other ways to compete, such as through innovation or improved customer service. #### **5. Industry Examples** Price wars have occurred in various industries, including airlines, telecommunications, retail, and technology. For example, airlines have engaged in fare wars, reducing ticket prices to attract passengers. In the smartphone industry, manufacturers have lowered prices and offered discounts to gain market share. #### **6. Considerations for Businesses** While price wars can be tempting as a short-term strategy to gain customers, businesses should carefully consider the long-term implications. It's important to evaluate the impact on profitability, brand reputation, and market dynamics. Alternative strategies, such as differentiation, innovation, or focusing on niche markets, may provide more sustainable competitive advantages. In summary, price wars are competitive battles characterized by aggressive price reductions. They can have various effects on businesses and consumers, and the strategies employed can vary. It's crucial for businesses to weigh the pros and cons and consider alternative approaches to maintain profitability and competitiveness in the long run. ### 출처(참고문헌) - ### 연결문서 -