Generally speaking, businesses have five options to respond to a price drop on a service or product equivalent to that offered by other companies fighting for the same market share. Even so, before making a decision it is important to analyze the causes that have caused the change, as well as whether it is a one-time promotion or a permanent price drop.
Don't just look at the competitor
Competitors' actions can divert our attention from the internal factors that determine price , so a decision to lower prices cannot be taken lightly. Not all companies have the same business/product lines, so in some cases the loss of profitability resulting from a price reduction can be assumed through the results of other lines, in order to improve their market positioning.
Likewise, the costs and size of organisations can limit their margins of action, so a price reduction is not always acceptable without making certain restructurings, despite a possible increase in the number of sales. After all, more sales increase production demand and certain costs, although some also fall based on mass production.
We must also consider our current position in the communication email list market , the composition of our product portfolio and the possible results of the competition's actions on them.
If the price cut comes from a competitor with a marginal market share, it may not be advisable to respond immediately, as this would mean giving up profitability for a possible loss of very little market share. If it is a blow to our bottom line, we will have to be decisive.
However, we must be aware that if we do nothing we could be losing ground and that this competitor could gain strength, so it would be advisable to counterattack through a communication campaign or a specific promotion. Defending the strengths of our brand can help consumers accept the extra price, although this is not feasible in all sectors or in all markets. For example, if our objective is to reach low-cost users, the reaction should be more aggressive.
